Saturday, June 11, 2011

Will appetite for tiny homes stay strong?

A MINUSCULE 344 sq ft.

That is the size of the smallest unit in a new freehold condominium in Balestier.

The Interweave is a 21-storey project in Kim Keat Road with 169 units, of which more than 60 per cent are one-bedroom units measuring between 344 sq ft and 431 sq ft. The other units are a mix of two- and three-bedroom units.

The apartments are priced at an average of $1,380 per sq ft (psf), with the smallest one-bedders selling from $535,000.

The Interweave, developed by the BS Capital Group, launches today.

BS Capital is no stranger to selling small homes. Its earlier project, Mount Sophia Suites, included units of about 366 sq ft.

Industry observers The Straits Times spoke to say this launch seems contrary to recent reports that the Urban Redevelopment Authority (URA) is encouraging developers to bump up the size of tiny apartments, or shoebox units. These apartments are usually 500 sq ft or less.

Ms Silvia Wang, business development and marketing manager for the BS Capital Group, confirmed that URA had approved the project in late March.

She said the firm had been advised by the URA to adjust the project's unit sizes, but the homes were ultimately found to have met the authority's requirements after plans underwent a thorough approval process: 'The URA doesn't just look at the size but also the layout. Our units are more squarish and were found to be acceptable.'

An earlier report by The Business Times stated that although the URA does not stipulate a fixed minimum size requirement for apartments, it has leaned towards issuing approvals for projects where the apartments are at least in the range of 377-538 sq ft in gross floor area.

The report also outlined how developers planning to build projects containing many small apartments have been verbally advised to build homes no smaller than 377 sq ft in gross floor area. This, the report states, has been going on from as early as the third quarter of last year.

Industry experts say while the small space may put off some buyers, projects might still sell well if there are enough buyers keen on such small homes.

'It can also be an indicator of whether small units, especially those less than 400 sq ft, are ultimately seen as offering a claustrophobic living condition or an acceptable living space,' said Mr Ong Kah Seng, senior manger for Asia-Pacific Research at Cushman & Wakefield.

He said the higher psf prices of shoebox units could skew the URA's property price index, which tracks private home prices using the psf value. But he added that the extent of the impact would depend on the number of such units as compared with the overall residential sales activity.

Another analyst, Mr Nicholas Mak, executive director of research and consultancy at SLP International, warned that shoebox units, with their smaller price tags, may be a bigger risk long-term. 'Paying a high price for a unit could mean buying an asset with a lower yield. And if there is a downturn in the market, buyers could lose a significant amount of what they invest.'

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