Why are New Condos Shrinking in Size?

  📌 Why are New Condos Shrinking in Size?

This question of why are new condos shrinking in size is one common question asked by buyers. The simple answer to that is because the price per square foot (PSF) is getting higher.

In order for the prices to be more affordable, developers have to come up with ways and ideas to keep the quantum of the property low. What the developers have done these days is to make the layout more efficient.

Let me go through a bit of history with you so that you can understand the trends that took place in the real estate market in the last few decades.

In the 80s, this project called Bayshore Park was being built. It had a helper’s room, a yard and even a back door in the units.

bayshore park

With the passing of time and the PSF increasing every year, developers got rid of the helper’s room and yard. The back door was gone too.The next trend happened in the 2010s when the open concept kitchen became quite common.

More recently, 2 beds 1 bath was introduced. We are more used to the layout of 2 beds 2 baths. The helper’s toilet or the third toilet in a 3-bedroom apartment is not so common nowadays because a toilet can cost around $100k. Bigger is always better when money is not the issue.

📌 New Condos Shrinking in Size | Are You Buying for Own Use or Investment?

New Condos Shrinking in Size – YES! How it affects you depends on why you are buying this particular property. For your own-use or investment? If it is for your own stay, go for the bigger ones because size does matter.

When buying for investment to collect rent, go for newer condos nearer to the MRT station. Most tenants prefer condos with new facilities and the convenience that comes with living near an MRT station.

A bigger 3-bedroom apartment will not bring you much more rental income than a smaller 3-bedroom apartment. You will likely save $100k when you buy a 2-bedroom 1 bath instead of a 2-bedroom 2 bath. The R.O.I. or rental yield is something you have to consider. From an investment perspective, smaller is fine.

📌 Your Tenants’ Preferences Matter More

I have encountered clients who approached me, saying that they are looking to buy a property for investment and they would prefer this particular property to be bigger in size. My question to them is: Why do you want a bigger condo and pay more when you do not intend to stay there?

When you are very clear that you are buying purely from an investment angle, you should not be too overly concerned whether the size fits you. In fact, you should be happy that sizes nowadays are more smaller so that prices are affordable.

New Condos Shrinking in Size

Another common challenge for buyers who are buying for investment is, when they bring their parents to show flats together. Usually these parents will either be supporting them financially or play the consultant role. There is a good chance that our parents, who are used to bigger living spaces, will pass comments saying that the apartment is too small or dislike the open concept kitchen.

The truth is that when you are buying for investment, it does not matter whether your parents like the apartment. Since you are buying to rent out unit, what matter more is the tenant’s preferences and their corresponding budget. Most tenants will not want to pay more rental because of higher floors or sea views.

What the tenant expects and what the owner wants differs greatly. Most tenants nowadays are very well travelled and well informed. They know what to expect in Singapore. If they are from countries like Hong Kong or Japan, they may even find the new condos here to be very spacious. Generally, tenants will prefer new smaller condo with modern facilities than older condo that are more spacious. So, the issue of “new condos shrinking in size” will not bother them too much.

top 10 condo question

[Top 10 Condo Questions]

  • Does it have to be Freehold?
  • Old Aging Condo has No Value?
  • New Condo Sizes are Shrinking! Secrets Revealed?
  • Why New Condo when Resale PSF is cheaper?
  • Should I avoid Low Floor & No Views Unit?
  • 1 BR vs 2BR –Which is Better for Investment?
  • Why “Near MRT” will Get Less Important?
  • Buying for Primary School Enrolment?
  • Does Developer reputation matter?
  • Does District Matter? (CCR vs OCR)

Check out all Top 10 Condo Questions here

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Dennis Lim

Dennis has more than a decade of experience investing in real estate. Like many fellow Singaporeans, he grew up in a HDB flat with dreams to live in a condominium. Through careful financial planning & hardwork, this became a reality when he was 30. He now owns 3 private properties in Singapore and has helped hundreds of Singaporeans to achieve their goal of upgrading their homes in land-scarce Singapore.

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