Mickey Mouse flats still a hit

Sales have remained strong for the so-called Mickey Mouse flats or those that measure 500 sq ft or less.

Credo Real Estate said transactions of these units accounted for 9.5 percent of total transactions in the first half of 2010, a three percent increase over the same period in 2009.

However, analysts are divided on whether demand for Mickey Mouse units can be sustained.

Shoebox living in 500 sq ft units or below has become a hot topic within the property circles. Experts said these units have become popular due to their lower price quantum, making them affordable to expatriates and young professionals.

Mickey Mouse flats are also likely to be located in the prime districts, luring homebuyers with their attractive location.

Pricing of these units in the CBD area could start from S$1,800 psf to S$2,000 psf, while those located outside the CBD area could range from $1,200 psf to $1,400 psf, according to Credo Real Estate. This represents a 20 percent increase compared to last year.

"I would think that this trend will continue to increase. I would not be surprised if we see Mickey Mouse units making up 10% of total sales in the second half of this year, and probably going up to 11 or 12% next year," said Liang Thow Ming, executive director for residential services at Credo Real Estate.

However, other market watchers said these flats cater primarily to investors wanting to cash in on the increasing property prices. Sub sales in the broad residential market in H1 2010 were 10 percent, down from 12 percent in 2009.

Speculative sales of these units have increased to 17 percent in the first six months of 2010 from 13 percent last year.

"Starting from May, Singapore private home sales market is starting to slow down. So they are concerned that there could be a correction on the horizon. As a result, they are selling off their investments. Some of these investors of small apartments are actually speculators. They are not intending to hold their investment for long term rental gains but rather just for speculative short term capital gains,” said Nicholas Mak, lecturer, School of Engineering, Ngee Ann Polytechnic.