NEWS
Property consultants call for more small shoebox style homes to be built
19-10-2012
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Real estate services provider Savills says that as the need to provide affordable and accessible homes rises the development of small, purpose built units for young singles and couples seems to attract controversy.
It believes that so called ‘shoebox units’ have an important role to play in the residential markets of key world cities. It says that homes as small as 250 square feet can successfully meet demand for city centre living amongst young professionals, for whom affordability is severely constrained.
‘Opposition to shoebox developments as a means of accommodating large numbers of young professionals and key workers in central locations has its roots in history,’ said Yolande Barnes, director of Savills World Research.
In July of this year, Mayor Bloomberg challenged New Yorkers to set aside memories of tenement misery and sought proposals for new designs on small living, unveiling a ‘microunit’ concept to widespread dissent.
But New York is not an isolated case, according to Barnes. ‘Many major cities have a horrible legacy of poorly conceived small units such as the cramped tenements of New York and the caged homes of Hong Kong. But while some cities, particularly in Asia, have successfully shaken off this heritage and created well designed, desirable units, policy makers and planners in old world cities have been more reluctant modernisers,’ she explained.
Affordability is a major issue for young workers in all world cities. While such units may command a relatively high price per square foot, the unit price is well below the market average and therefore accessible. Young working singles and couples are increasingly low occupiers of their homes, so affordable living space, close to work and amenities arguably represents a better quality of life than a larger space in a less vibrant location, a long commute from the office.
Asian cities such as Hong Kong, Singapore and Japan have not been squeamish about small unit living. In Hong Kong, quality and location usually take precedence over size, allowing the shoebox to be repackaged as ‘boutique luxury residences’, often located in prime hotspots on Hong Kong Island, achieving premium prices as high as HK$20,000 per square foot.
The relatively desirable nature of this accommodation also means premium yields for investors, netting 3%, slightly above the market average. As a result, developers are now entering the market to deliver further stock, underpinned by HK SAR government policy which allows the redevelopment of buildings over 50 years old.
In Singapore, where the ‘shoebox’ term was coined, higher per square foot values have also lured investors and developers. Currently a premium of around a third is payable compared to other non-landed property values, at over US$1,250. However, government policy recognises the limitations of such small dwellings and future developments will be restricted to core central locations to prevent speculation.
‘In terms of design and layout, a lot has changed over recent years as technological advances have transformed space needs, while the 24/7 social infrastructure available in most cities has lessened the number of hours typically spent at home,’ said Simon Smith, Hong Kong based senior director of Savills Research.
‘Modern designers and architects have been particularly creative in this segment of the market, adapting to improvements in domestic appliances as well as changing lifestyles, creating a model that is working in Asia,’ he added.
By contrast, old world regimes are slow adopters. In Sydney, lenders remain reluctant to lend against units under 500 square feet, precluding individual ownership of very small units by the very people who would wish to occupy them. In London, the concept has struggled to shake off negative connotations, and the Royal Institute of British Architecture recently termed speculative developer output as ‘shameful shoeboxes’ which is hardly encouraging.
In the UK local authority planners have been resistant to such small units. Also, the fact that it is homes of scale that attract premium values in prime central London means this is where developer interest has focused.
The exception has been Pocket Living, though their units are large by Asian standards. Their aim has been to provide affordable intermediate homes for those priced out of central London. The exception has been a development in Westminster, but all sales and resales require council approval and must be to qualified buyers, at no more than 80% of market value.
As a result, like New York and Sydney, London has not yet embarked on the experiment of high quality micro unit developments in prime central locations, and designed to target market owner occupier buyers, investors and renters.
‘New world cities have experimented successfully with high specification shoebox units, finding strong demand amongst young workers wishing to live and work in central locations. The old world now has to make up its mind about the pay off between size, affordability and centrality in its cities, given green belt issues and limits to city growth,’ said Barnes.
‘The shoe box is a solution that should not be ignored. This need not be a shameful initiative as a shoebox can accommodate bespoke designer shoes and we should stop being so prescriptive as different sizes fit different people,’ she added.
