Resale Prices of Shoebox Apartments Expected to Climb
SINGAPORE: Prices of compact condominium units in central Singapore are anticipated to outpace those of larger homes in the coming years, thanks to new restrictions aimed at limiting the construction of such units, analysts have said.
Effective from 18 January 2023, developers of private residential projects in central planning zones must ensure at least 20% of the units have a minimum size of 70 sq m, approximately the area of a two-bedroom flat. This policy applies to new private apartments, condominiums, and residential components in mixed-use projects.
Central zones include Newton, Orchard, River Valley, Outram, and Downtown Core, among others. The Urban Redevelopment Authority (URA) introduced this measure to create a more diverse range of housing options and encourage family living in prime locations.
Limited Supply Could Propel Resale Market
A reduced supply of shoebox apartments in central districts is expected to intensify demand in the resale market, pushing prices upward.
“Investors seeking smaller, affordable units will turn to the resale market, which could significantly boost demand and prices,” said Mr Lee Sze Teck, research director at Huttons Asia.
This trend will likely become more pronounced as newer developments align with the guidelines, resulting in fewer small-unit options over time.
Conversely, the influx of larger apartments may stabilise prices in that segment, although prime-location premiums will persist, analysts cautioned. Developers may face slimmer margins, potentially moderating en bloc redevelopment prices.
Attracting Families to Central Areas
The URA aims to make central Singapore more appealing to families by mandating larger units. “A lack of family-friendly apartments has deterred families from moving to central districts,” said Ms Catherine He, research director at Colliers.
This initiative coincides with upcoming developments in Marina Gardens and CBD areas, designed to position central zones as vibrant residential hubs. However, Ms He noted that central neighbourhoods lack critical amenities such as schools and markets, which are more abundant in suburban areas.
Bigger Homes Align With Emerging Trends
Median home sizes in central Singapore have shrunk significantly over the years, but demand for spacious living persists, driven by remote work and evolving lifestyle needs.
Though household sizes have decreased to 3.15 members on average, buyers increasingly prefer larger homes to accommodate flexible living arrangements. The minimum 70 sq m threshold aligns with modern expectations for quality living, incorporating space-efficient design and smart home technologies.
The new regulations are expected to balance market dynamics, offering a mix of unit sizes while enhancing liveability in Singapore’s most sought-after locations.
