Why shoebox units continue to be popular

By Elizabeth Choong
/ EdgeProp Singapore |
Queens Peak has 25 profitable transactions for shoebox units over the past 12 months. (Picture: EdgeProp Singapore)
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SINGAPORE (EDGEPROP) - For the purpose of this article, we define shoebox units as condominium units that are 46 sq m (500 sq ft) or less. Shoebox units are popular with investors because their affordable price quantum translates to lower barriers of entry.
Smaller units are also popular with developers because of their higher unit price. Their small size also allows developers to build more units per land parcel.
However, the small size of shoebox units attracts many criticisms. They are often deemed to be too small for long-term stay by owner-occupiers, especially for families, hence forcing owner-occupiers to move if their family size increases. Investors may find that the compact size limits the potential tenant pool to singles on a budget unless there is a tight supply of rental housing.
Despite these criticisms, shoebox units still play a necessary role in the residential market, although sales transactions for shoebox units account for only 7% to 11% of all sales transactions of condominiums in Singapore from 2012 to 2022.

District 19 has the most sales transactions for shoebox units

Based on URA data on sales transactions over the past 12 months, five districts have at least 100 transactions of shoebox units.
District 19 has the most sales transactions of shoebox units, with 242 transactions. The number of transactions in the district was given a boost by sales of such units in The Gazania (41 transactions), Riverfront Residences (34 transactions) and Kingsford Waterbay (20 transactions).
shoebox table1 - EDGEPROP SINGAPORE

Regulations and implications

In 2012, URA introduced guidelines on the maximum permissible number of dwelling units for a non-landed residential development outside the Central Area. The maximum number of units was derived by dividing the gross floor area (GFA) of the proposed building by 70 sq m (753 sq ft). Four areas (Telok Kurau, Kovan, Joo Chiat and Jalan Eunos) were subject to more stringent requirements of 100 sq m (1,076 sq ft) to better address local infrastructure capacity concerns arising from new developments.
In January 2019, the measures were tightened to 85 sq m (915 sq ft) for all new flats and condominium developments outside the Central Area and 100 sq m (1,076 sq ft) for nine areas. The guidelines also apply to the resident component of mixed-use developments.
Additionally, developers were requested to have a good mix of unit types. They must ensure that a minimum of 20% of the total number of units have a net internal area of at least 100 sq m (1,076 sq ft) and a maximum of 20% of the units have a net internal area of less than 50 sq m (538 sq ft). URA defines net internal area as the net living space of a unit, excluding voids, balconies, air-conditioner ledges and other external areas.

Latest regulations and Implications

On Oct 18, URA introduced regulations that will take effect from Jan 18, 2023, to align with their aim of creating a more vibrant Central Area by having more live-in families. Under the new regulations, a minimum 20% of the units in new non-landed residential developments in the Central Area must have net internal area of at least 70 sm (753 sq ft). This includes the residential component of a mixed-use development.
shoexbox map1 - EDGEPROP SINGAPORE
The newest regulations means that developers have to build more larger units in the Central Area, which is good news for families who wish to live in the Central Area. However, buyers looking to purchase a shoebox unit in the Central Area will have fewer choices and hence may have to pay more, especially if they are looking for a new unit.

Reason 1: Lower quantum prices means lower barriers of entry for investors

Based on URA data for sales transactions in 2022, average price of shoebox units is $1,901 psf. This is 10.2% higher than their larger counterparts of at least 1,000 sq ft ($1,725 psf) and 4.6% higher than condominium units of all sizes ($1,817 psf). The small size of shoebox units allows for higher unit prices while keeping quantum prices within a comfortably affordable range.
Average price for shoebox units has been on a gradual upward climb from $1,425 psf in 2012 to the current $1,901 psf, which translates to a growth of 33%. This growth is slower compared to larger units of at least 1,000 sq ft (52%) and units of all sizes (50%).

Reason 2: Investors looking to capitalise on robust rental market

The robust residential rental market could have attracted some investors looking to buy shoebox units. The lower total quantum price would make shoebox units very attractive to these buyers. Additionally, shoebox units have consistently fetched higher unit rents compared to their larger counterparts.
Currently, shoebox units are fetching $5.77 psf per month compared to $4.08 psf per month for larger units. Rents for shoebox units have increased by 19.2% from $4.84 psf per month last year. A smaller growth of 18.3% to $3.45 psf per month was reported for units larger than 500 sq ft.
However, investors must bear in mind that the compact size of a shoebox unit will exclude tenants who has a family living with them. Additionally, shoebox units may decline in demand as the current tight supply of rental home eases and tenants have more available choices.

Reason 3: Shoebox units are gaining popularity

Sales volume for shoebox units hit a peak of 3,104 in 2012 and a lower peak of 2,332 units last year. So far, 1,284 shoebox units have been sold this year with the majority being resales (69%), followed by new sales (23%) and sub-sales (8%).
Last year’s increase in sales volume for shoebox units could be attributed to more singles moving out of the family home in search of space and privacy as more companies adopt hybrid working arrangements after Covid-19. A competitive residential rental market and surging rents could have nudged some single professionals to become homeowners instead of tenants. Many of them are unable to buy HDB flats because they are under 35 years old and unmarried, but a shoebox unit fits their modest budget and space requirements.

Reason 4: Shoebox units tend to be profitable

Property prices have been given a boost by the robust market this year. As such, four out of the five completed condominiums with the most transactions for shoebox units do not have any unprofitable transactions. Parc Rosewood is the sole exception with four unprofitable transactions, which is unsurprising as it was identified as one of our top five most unprofitable condominiums.
Despite the bullish market, there were a number of unprofitable sales transactions for shoebox units over the past 12 months.
Ocean Front Suites leads the pack with five unprofitable transactions out of a total of six transactions, followed by Jool Suites and Loft @ Nathan with four unprofitable transactions each. This is despite the freehold tenure of Jool Suites and Loft @ Nathan. Ocean Front Suites has a tenure of 956 years with effect from 1937.
shoebox table2 - EDGEPROP SINGAPORE
All transactions for shoebox units in V on Shenton in the past 12 months were unprofitable. The transactions were for units of 441 to 474 sq ft. Losses ranged from $7,000 to $148,000. Three of the units were bought in 2012 and 2013 when prices for shoebox unit were still growing on the back of strong demand.
shoebox table3 - EDGEPROP SINGAPORE
Average price for shoebox units in V on Shenton peaked at $2,652 psf in 2013 and has since declined to the current average price of $2,199 psf. Despite the price decline for shoebox units in V on Shenton, it is still trending higher than shoebox units in District 1 ($2,054 psf) and the whole of Singapore ($1,901 psf).

CanningHill Piers and The Poiz Residences top the list

Buyers interested in shoebox units might want to note that there are 15 condominiums with at least 20 sales transactions of shoebox units in the past 12 months. Among the 15 condominiums, uncompleted developments took the top five spots, with CanningHill Piers taking the lion’s share (131 transactions).
shoebox table4 - EDGEPROP SINGAPORE
For completed developments, The Poiz Residences topped the list with 27 transactions for shoebox units in the past 12 months, followed closely by Queens Peak (25 transactions). With the exception of Parc Rosewood, the five completed condominiums on the list are centrally located.
shoebox table5 - EDGEPROP SINGAPORE
Among the completed developments, District 3 is the only district with more than one development on the top five list. Singles who need immediate occupation in a central location can consider Queens Peak and Commonwealth Towers, which are located beside each other and within walking distance of Queenstown MRT Station.
shoexbox map2 - EDGEPROP SINGAPORE
Average prices of shoebox units in Queens Peak and Commonwealth Towers are trending below their counterparts in District 3. In 4Q2022, average price of shoebox units in District 3 is $2,359 psf, which is 13.5% higher than Queens Peak ($2,079 psf) and 19.8% higher than Commonwealth Towers ($1,969 psf).
Average price of shoebox units in Queens Peak could be trending higher than Commonwealth Towers because Queens Peak received TOP in 2020, three years after Commonwealth Towers.


There have been many criticisms targeted at shoebox units because of their compact size, which is deemed to be not conducive for families. The government has also enacted several rounds of regulations that reduce the number of shoebox units that developers can build in each new residential and mixed-use development. However, shoebox units are a necessary part of the housing landscape in Singapore.
The lower quantum price of shoebox units lowers the barriers of entry for investors with a more modest budget and allows them to create wealth for themselves and their family. Shoebox units have shown to be largely profitable and attract a higher unit rent than their larger counterparts.
Additionally, shoebox units meet the housing needs of single professionals who are caught in “no man’s land”. They are not eligible for HDB flats, but do not have sufficient funds to buy a larger condominium unit. As they require less space, the compact size of shoebox units is sufficient for their needs and the lower quantum price fits their modest budget.

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