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When size doesn't matter: Why shoebox apartments are gaining popularity again

These apartments may be less than 500 sq ft in size but they are big on gains on the property market and more.

Shoebox units (aka the property investor starter kit) are much maligned by old-school investors. Too small for families, too costly per square foot, too hard to offload. But if that is so, why is everyone so interested in these apartments again? 

Until larger condominiums become affordable again, investors eager to break into the property scene tend to zero in on two main options at the moment: Commercial property and shoebox units. However, the commercial slice of the property pie is harder to understand, even though it is exempt from the Additional Buyer's Stamp Duty (ABSD. 

Shoebox units, on the other hand, are priced within reach (even when taking into account the stamp duties), for residential use and hence, are familiar to investors. 

(Photo: Pexels)

Here are more reasons why these tiny apartments are making a comeback on the property market. 


Detractors may be surprised to learn that, in terms of gains, shoebox units (defined as 500 sq m or smaller) actually outperform condominiums on the property market. The average price for shoebox units were around S$276,000 in 2014 and rose to around S$748,300 in 2019. This is an increase of about 171 per cent. 

READ: Storage solutions: How to maximise every inch of your shoebox flat 

For the overall condominium market, the average price grew from about S$834,650 in 2004 to about S$1.59 million in 2019, making it a jump of over 90 per cent – and significantly lagging behind shoebox units.

Last year, a Knight Frank report showed that owners who sold their shoebox units saw an average capital gain of 11.5 per cent; comparatively, owners of larger apartments saw an average gain of 10.6 per cent. 

(Photo: Unsplash)

Rental yields were unsurprisingly higher for shoebox units as well (due to their low overall cost) and averaged 3.5 per cent. The rental yield for most residential properties is between 2 to 3 per cent.


Under the cooling measures implemented in July, the maximum loan-to-value (LTV) ratio from a bank loan is now 75 per cent, down from 80 per cent. For a regular condominium priced at S$1.5 million, this difference of five per cent means an added down payment of S$75,000. But for a shoebox unit priced at S$835,000, the additional down payment is just S$41,750.

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The other concern is the ABSD for owning a second property. For a Singapore citizen, this is 12 per cent of the purchase price or value of the second property, whichever is lower. This can come up to around S$180,000 for a regular-sized condominium priced at S$1.5 million. For a shoebox at S$835,000, however, the stamp duty is just S$100,200.

For most new investors who don’t have big budgets, the cooling measure rules out property investments outside of the more affordable shoeboxes. And even if the investor isn’t cash strapped, shoeboxes remain attractive because of the low initial cash outlay.


The proportion of Singaporeans not having families is growing, with fertility rates at 1.16 last year (for a population to replace itself without relying on immigrants, the rate must be 2.1). This has some bearing on shoebox apartments, which were previously deemed too small for, say, a family of a husband, wife and two children.

(Photo: Unsplash)

But 500 sq ft can be sufficient and practical for an individual, or even two people. They can also enjoy access to condominium facilities, a higher standard of interior finishing than a flat, and possibly, even a better location. For instance, they may be unable to afford a full-sized condominium in District 9, but a shoebox apartment in this location might not be out of the question.

READ: The overrated, impractical interior design trends that Singaporeans love

Also, consider the demographic of singles between the ages of 25 and 34, who can’t attain an HDB flat (barring the Joint Singles Scheme) but want a place of their own. They could afford a shoebox condominium unit as it may not be priced out of their reach, given the low quantum (total cost).


Older Singaporeans, whose grown-up children have moved out of the family home, have begun to consider moving into shoebox units, too. Those with bigger budgets may prefer the luxury of a small condominium, rather than, say, a three-room or two-room flat. Those who are used to condominium living may also prefer to downgrade from a full-sized condominium to a smaller one, rather than move into an HDB flat.

(Photo: Unsplash)

The smaller unit size is seldom a concern for these seniors as it makes housekeeping easier. It also lets them leave behind a property for their children or grandchildren when they pass on. Seniors who are still active may also appreciate access to amenities such as a private pool, gym and BBQ pits, which they may not find in HDB estates.


Under the Urban Redevelopment Authority's (URA) new rules, the number of shoebox units a developer can build is limited. For most developments, the total Gross Floor Area (GFA) divided by 100 will determine the maximum number of units allowable (in some areas, the restriction is even tighter).

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Developments such as The Florence Residences are likely to be the last with a high number of shoebox units. As such, buyers can expect a fair amount of competition for them; especially with other investors who have been priced out of bigger condominiums by the cooling measures. In short, the combination of scarcity and cooling measures means you can expect longer queues for shoebox units in the near future.

This story first appeared in

Source: CNA/bk