PENTUPRENTALDEMANDFOR
SHOEBOXUNITS
SEPTEMBER2013/ISSUE5
SQUAREFOOTRESEARCHPTE.LTD.
Phone:+6562232163
Website:www.squarefoot.com.sg
Rentalcontractssignedforshoeboxunitsmorethandoubledin1H13comparedto1H12.Thesurge
in volume is attributed to the increase in shoebox unit supply from newly completed projects, the
strongrentaltakeupratesuggestsapentupdemandforsuchunitsintherentalmarket.
SEPTEMBER2013
RENTALMARKET
HUNGRYFORLESS,PENTUPDEMANDFORSHOEBOXUNITS
MarketOverview
Rental demand continued to
strengthen despite a slowing
economy. A total of 12,352
rental contracts in the non
landed private residential
market have been reported in
thesecondquarterofthisyear,
a growth of 16.7% qoq or
11.6%yoy.Overall,therental
demandfornonlandedprivate
residential units in 1H13 has
remainedpositive,withatotal
of 22,937 rental contracts
signed, a 10.2% rise compared
to1H12.
BreakdownbyUnitSize
Breaking down rental demand
by unit sizes, shoebox units
grew by a staggering 93% yo
y, outshining the other unit
sizes(seeTable1).
45,000
40,000
35,000
25,000
20,000
UnitSize
(sqft)
1H12
1H13
Growth
300500
388
748
93%
500800
2,391
2,663
11%
8001,000
4,350
4,687
8%
1,0001,400
6,741
6,867
2%
>1,400
5,629
5,829
4%
*Excludeunitsizeswithlessthan15rental
contractssigned
Source:URA,SquareFootResearch
Figure2:Rentalcontractssignedforshoebox
units,Q1'12toQ2'13
800
600
400
200
0
1H2012
2H2012
1H2013
Source:URA,SquareFootResearch
Figure1:RentalVolume,Q1'2000toQ2'2013
30,000
Table1: Rentalcontractssignedbyunitsize
Q4
Q3
15,000
Q2
10,000
Q1
5,000
0
Source:URA,SquareFootResearch
SEPTEMBER2013HUNGRYFORLESS,PENTUPRENTALDEMANDFORSHOEBOXUNITS
Shoeboxunitsareattractiveto
tenantsastheybridgethegap
between room and apartment
rental,offeringtheprivacythat
islackinginroomrentalandat
a lower rent compared to
largerapartment.
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RENTALMARKET
HUNGRYFORLESS,PENTUPDEMANDFORSHOEBOXUNITS
Pitched as the Boutique
Luxury Residences, shoebox
units are usually creatively
designed with a modern
outlook to compensate its
small area. These units are
primarily targeted at young
single professionals or couples
without kids seeking for
accommodations that are
conveniently situated near
their workplace, within city
fringe,attheexpenseofspace.
APracticalChoice
Culturally, how accepting
tenants are to shoebox units
affectsitsdemandintherental
market. The concept of
shoeboxunitsisnotsomething
unique to Singapore but
prevalentworldwideespecially
in busy cities and countries
wherelandisprecious.
Driven by practicality and
sustainability, expatriates in
Singaporemayturntocheaper
accommodationsasthecostof
living continues to rise.
According to Mercers 2013
Cost of Living survey,
Singapore is now the second
mostexpensivecityinAsiaand
the fifth most costly location
worldwide.
For expatriates living alone or
with their spouse, a well
equipped unit with adequate
living space may suffice.
CoreCentralRegion
Therentaltakeupratefornew
projects with shoebox units in
district 9 and 10 is strong.
Vivacesawa91%takeuprate
basedonthenumberofrental
contracts signed versus the
estimated number of shoebox
units available. It is interesting
to note that the number of
rentalcontractssignedwithina
year for RV Suites exceeded
thenumberofshoeboxunitsin
the project. This may be due
to rental contracts that are
shortterm in nature (6
months) that have expired or
early termination on rental
contracts. Whichever the case
may be, the high replacement
rate is yet another indication
that rental demand for such
unitsisstrong.
Figure4:Rentaltakeuprateof
shoeboxunitscompletedsince2012
OutsideofCentralRegion
CentralRegion
Unleased
35%
Unleased
48%
Leased
52%
Leased
65%
Source:URA,SquareFootResearch
SEPTEMBER2013HUNGRYFORLESS,PENTUPRENTALDEMANDFORSHOEBOXUNITS
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RENTALMARKET
HUNGRYFORLESS,PENTUPDEMANDFORSHOEBOXUNITS
RestofCentralRegion
Conclusion
Rentaldemandremainsstrong
in 1H13 on the back of an
increasing trend since 2007.
Thenumberofrentalcontracts
signed for shoebox units
increased by more than two
fold compared to a year ago,
indicating a pentup demand
forsuchunits.
OutsideofCentralRegion
Suites @ East Coast tops the
list in OCR with a rental take
up rate of 68%. Siglap V
achieved 63.8% rental takeup
rate for its shoebox units
despite entering the market
only in 2013. Although
shoebox units fetch a higher
persquarefoot rental, the
lower rental quantum is really
the key in keeping demand
alive.
SEPTEMBER2013HUNGRYFORLESS,PENTUPRENTALDEMANDFORSHOEBOXUNITS
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SHOEBOXRENTALTAKEUP
CENTRALREGION
Projectname
ALEXIS
CAVANSUITES
CITYLOFT
PARCSOMME
VIVACE
RVSUITES*
SUITES@SHREWSBURY
AIRSTREAM
BLISSLOFT
DOMUS
OPALSUITES
SUITES@TOPAZ
THEVERVE
8@WOODLEIGH
CASAAERATA
CENTRASTUDIOS
CENTRASUITES
LABRISA
SUITES@CHANGI
TREASURES@G19
BELLACASITA
ISUITES@MARSHALL
ONANSUITES
STUDIOS@TEMBELING
SUITES@KATONG
THOMSONVTWO
SUITESDELAUREL
LOFT@RANGOON
LEICESTERSUITES
Postal Comple
district tion
year
3
8
8
8
9
10
11
12
12
12
12
12
12
13
14
14
14
14
14
14
15
15
15
15
15
20
21
8
13
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2013
2013
Totalno.
ofunits
293
36
40
30
85
96
15
70
48
104
19
46
106
330
78
51
62
84
44
27
57
32
29
25
51
74
72
24
47
Est.no.
of
shoebox
units
112
33
34
18
62
15
12
41
12
26
16
33
34
28
40
48
58
38
40
24
24
15
3
13
36
45
11
22
41
No.of
rental
contracts
signed
77
24
29
10
57
18
7
21
7
9
12
15
15
20
27
39
51
19
21
13
16
12
2
7
25
31
5
12
2
Rental
take
up
rate1
68.8%
72.7%
85.3%
55.6%
91.9%
58.3%
51.2%
58.3%
34.6%
75.0%
45.5%
44.1%
71.4%
67.5%
81.3%
87.9%
50.0%
52.5%
54.2%
66.7%
80.0%
66.7%
53.8%
69.4%
68.9%
45.5%
54.5%
4.9%
Avg.
rental2
$3,130
$2,530
$2,640
$2,750
$3,340
$3,400
$2,740
$2,450
$2,790
$3,280
$2,440
$2,410
$2,800
$2,840
$2,510
$2,540
$2,610
$2,560
$2,540
$2,570
$2,680
$2,480
$2,480
$2,690
$2,510
$2,700
$2,660
$2,890
$2,750
Basedontransactioninthepast6quarters,Source:URA,SquareFootResearch
Note:(1)Rentaltakeuprateiscomputedbasedonthepercentageofrentalcontractssignedovertheestimatednumberof
shoeboxunitsavailableintheproject.(2)Averagerentalhasbeenroundeddowntothenearesttens.*Rentaltakeuprate
forRVsuiteshasexceeded100%,presumablyduetonewcontractssignedinreplacementofoldcontractsthathaveexpired
orterminated.
SEPTEMBER2013HUNGRYFORLESS,PENTUPRENTALDEMANDFORSHOEBOXUNITS
Page4
SHOEBOXTAKEUPRATE
OUTSIDEOFCENTRALREGION
Projectname
PALMERAEAST
SUITES@EUNOS
ESPIRASUITES
HERITAGEEAST
SUITES@EASTCOAST
OPTIMA
ISUITES@TANI
PRIMORESIDENCES
RESIDENCESBOTANIQUE
CASPIAN
SIGLAPV
Postal Comple
district
tion
year
14
14
15
15
15
16
19
19
19
22
15
2012
2012
2012
2012
2012
2012
2012
2012
2012
2012
2013
Totalno.
ofunits
32
28
46
65
116
297
20
64
81
712
114
No.of Rental
Est.no.
Avg.
rental take rental2
of
up
shoebox contracts
signed rate1
units
15
6 40.0% $2,770
18
11 61.1% $2,590
30
11 36.7% $2,690
44
19 43.2% $2,590
70
48 68.6% $2,320
24
15 62.5% $3,190
8
2 25.0% $2,550
15
4 26.7% $2,550
3
2 66.7% $2,800
18
7 38.9% $2,770
19
12 63.2% $2,480
Basedontransactioninthepast6quarters,Source:URA,SquareFootResearch
Note:(1)Rentaltakeuprateiscomputedbasedonthepercentageofrentalcontractssignedovertheestimatednumberof
shoeboxunitsavailableintheproject.(2)Averagerentalhasbeenroundedtothenearesttens.
SEPTEMBER2013HUNGRYFORLESS,PENTUPRENTALDEMANDFORSHOEBOXUNITS
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APPENDIX
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SEPTEMBER2013HUNGRYFORLESS,PENTUPRENTALDEMANDFORSHOEBOXUNITS
Page6