Why You Should Examine a Shoebox Apartment in Singapore
A shoebox apartment in Singapore is almost as it sounds. It is a small apartment unit that someone buys or rents. The shoebox apartment market saturated with potential buyers and tenants who are looking for a less expensive deal for the private property.
Potential investors and homeowners both are trying to get into the property ownership market for an affordable price tag of less than $1 million.
Read on to find out more about shoebox apartments in Singapore.
What is a shoebox apartment in Singapore?
A shoebox apartment in Singapore is typically less than 50 square meters (538 square feet) of living space. This type of living arrangement includes one-room studio apartments for rent. These are attractive properties for middle-income buyers, investors, singles or couples without children. Although they do not have much space, they are enjoying higher quality than HDB flats.
Shoebox apartments come with amenities to those found in the condo, except your living space is smaller than those of your neighbours. Living arrangements include one-room studios, two or three bedroom units within the project.
You likely to get a pool, tennis courts, gardens and basketball courts as part of the shared facility. However, you may have a lot more neighbours in a 1 or 2 bedroom project than you would in a condo.
A shoebox unit in Singapore also serves as a way for investors to make money by renting the unit to tenants. An investor can purchase several units and then rent them to tenants as investment income.
Shoebox apartments are attractive especially if close to public transportation hubs as many people take the bus or MRT to work. This trend changed when the government allowed developers to build high rises with shoebox apartments in suburban areas. This type of dwelling is just one element among several in the Singapore property market.
How do you get a shoebox apartment in Singapore?
As with any substantial loan for a property, you have to look at your finances first. Investors love shoebox apartments in Singapore because lower prices tend to lower the barriers of ownership. Even with lower property prices due to smaller sizes, there are two financial considerations to examine.
The Total Debt Servicing Ratio (TDSR) cannot exceed 60 percent of your income. That may cause property buyers to pay more in cash needed for down payment on the property and possibility of a lower loan to valuation amount.
Secondly, buyers have to pay up to 15% Additional Buyer’s Stamp Duties (ABSD) if they are buying on their 2nd or more property.
Investors may buy bigger, connected units that have dual keys. Even though this studio unit is next to the larger apartment, these sold as just one unit to any investor. Buyers get a package deal that might be cheaper than purchasing individual apartments.
The investor now has the option to stay in the larger unit and rent out the studio apartments.
The bottoming out of property prices between 2016 and 2018 makes purchasing shoebox apartments an attractive option, no matter the size if you can afford them.
If you choose to invest, you could see a nice return on that investment when property prices rise, and you can sell your apartment at the right time. OUE Twin Peaks offer such rare opportunity now.
What about renting a shoebox apartment in Singapore?
Regarding renting a shoebox apartment in Singapore, prices have come down from their peaks 2013. Back then, shoebox apartments averaged around $2,600 per month for renters. Going into 2017, rents are between $2,000 and $2,600.
There are around 9,600 total shoebox apartments in Singapore, so there is plenty of supply. Your living space is smaller than you find in an apartment or a flat, but you get many more amenities. You have access to a jacuzzi, gym and spa for some properties, so long as you pay your monthly fees for living there beyond your monthly mortgage payment for owners.
Newer developments are always looking for buyers and tenants to fill spaces. You might find some fantastic newer units as Singapore develops its master plan for sustainability over the next few years.
When apartments sit empty, they do not make money. Finding the best possible price for rent is one reason you can use the help of a real estate salesperson.
Why do you need assistance to find a shoebox apartment in Singapore?
A real estate salesperson can help you negotiate a fair rental price because this person knows investors and owners. A real estate salesperson also knows when units may come available if you want that cosy corner spot or a particular view of the island.
A real estate professional can also put you in touch with the renter who can describe what it is like to live in certain units.
A real estate salesperson also knows what places are trending, when new projects are going to TOP and what the future of the market holds. It is a buyer’s market right now due to lower property prices and changes in immigration policy, but that could switch to a seller’s market or a renter’s market quickly. This professional can help navigate the tricky trends of shoebox apartments in Singapore.
Dylan Tan knows his way around Singapore’s properties for sale or rent. He can help you narrow your choices when it comes to a shoebox apartment in Singapore. Dylan can also assist with a basic financial assessment regarding what you can afford.