http://www.businesstimes.com.sg/arch...condo-20140610

Published June 10, 2014

Tips on dealing with that empty condo

A new property left vacant deteriorates faster: Century 21 CEO

By Kalpana Rashiwala

[email protected] @KalpanaBT


[SINGAPORE] "When we bring potential tenants for viewings these days, we have to look at double the number of properties compared with, say, two years ago," said Century 21 chief executive Ku Swee Yong.

"There are lots of choices from newly completed projects. And as long-term expats move to newer condos, older properties are also coming to the market for tenants. So vacancies are also rising."

One reason some investors are keeping their units in newly completed projects empty is that they intend to sell the property to realise the nice capital appreciation they may be sitting on.

In that case, it may be easier to keep the unit vacant in the interim, since this will facilitate viewings for potential buyers. Also, potential buyers keen on occupying the unit may not like a property with an ongoing lease that has some way to run.

"Of course, the flipside to keeping the unit empty, would be that the owner may not be aware of any defects that he could get rectified for free by the developer during the one-year defects liability period. Moreover, a new property that is left empty deteriorates faster than one that's well-used," said Mr Ku.

"So my advice is that such owners either quickly find a tenant by probably giving some discount on the rent, or lower their capital appreciation expectation and sell the property," he added.

Ong Teck Hui, national director at Jones Lang LaSalle, noted that during the run-up in the residential market in the past four years, many investors were attracted by affordable prices - referring to the trend of developers minting smaller units to keep absolute prices within buyers' reach - without considering sufficiently, how well the unit would lease, especially in a tough leasing market.

"For example, suburban units without strong attributes such as proximity to MRT station and amenities tend to be more vulnerable, so buyers should carefully consider all the leasing factors and not be taken in by lump-sum price affordability," he advised.

R'ST Research director Ong Kah Seng advised investors holding on to completed suburban condos, especially small units that are more difficult to lease out, to consider selling the property instead of leaving it empty.

"Suburban condo projects usually don't have unique designs and thus have little intrinsic resale value that can be extracted in the longer run. A consistently untenanted property may not make financial sums viable for such owners in the long term," he said.

As for those thinking of buying a private residential property for rental income, DTZ's regional head (SEA) research Lee Lay Keng lists some general tips on the desirable property attributes: Pick a property in an accessible location but ensure that it is not near major construction works as the noise pollution and road congestion may put off tenants. In addition, the property should be well-maintained and near schools (for renting to families).