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reporter2
03-05-12, 16:18
http://www.businesstimes.com.sg/archive/thursday/specials/property/rental-volume-rcr-see-marked-increase-q1

Published April 26, 2012

Rental volume in RCR see marked increase in Q1

Increase could be driven by squeezed housing allowances, analysts say

By Mindy Tan


NON-LANDED rental transactions in the rest of central region (RCR) saw a marked increase in the first quarter of 2012, jumping 25.5 per cent over the previous quarter.

According to data from the Singapore Real Estate Exchange (SRX), 2,025 rental transactions were clocked in RCR in Q1 this year, versus 1,613 the previous quarter.

Transaction volume in the core central region (CCR) which includes the traditional prime districts 9, 10 and 11, as well as the financial district and Sentosa Cove; and outside central region (OCR) on the other hand remained flat.

Rental transaction volume in CCR registered 2,165 transactions in Q1 2012, a small dip from the 2,181 transactions clocked the previous quarter. Within OCR, transaction volumes increased slightly, from 2,604 in Q4 last year, to 2,656 in Q1 2012.

Overall, the volume of rental transactions in Q1 saw a 7.0 per cent increase, quarter-on-quarter.

One of the reasons driving transactions volumes in the RCR could be tighter rental budgets, as companies reduce expatriate hiring and housing allowances, suggested consultants.

"With less flexible rental budgets these days, expatriates who formerly could rent in the CCR may have to find housing in the RCR. Although their rental budgets are currently smaller than they were before, but by RCR standards, they are still very generous. This has the effect of driving up rentals and transactional volumes there," said Savills Singapore research head Alan Cheong.

Indeed, looking at the overall rental transaction volume in Q1, the figures imply strong leasing activity despite making a seasonal adjustment, said HSR Property Group special adviser Donald Han.

"Leasing activity usually peaks in the second and third quarter as tenants prefer to settle down prior to the year-end festivities and holidays. On a seasonally adjusted basis, Q1 usually reflects a slower rate of activity compared to Q4," said Mr Han.

"(The SRX figures) may imply strong leasing activity in Q1 despite making a seasonal adjustment. As for Q1 2012's rise in activity, this could be due to looser immigration policy prior to tightening measures in 2011/2012," he added.

Despite the jump in RCR transaction volumes, average RCR rental rates saw a minor increase of 1.9 per cent, from $3.69 per square foot (psf) in Q4 2011, to $3.76 psf in Q1 2012.

Lee Sze Teck, senior manager, research and consultancy, at DWG, suggested that even as the number of sizeable projects in the RCR obtaining their Temporary Occupation Permit in Q4 2011 - including Trevista, and Reflections at Keppel Bay - drove up transaction volumes, the increase in supply could have capped the average rental rate increases.

In the core central region, average rentals dipped slightly, from $4.68 psf in Q4 last year to $4.66 in Q1 2012. Average rent in the OCR too dipped from $2.99 in the previous quarter, to $2.98 in Q1 2012.

Looking ahead, Mr Lee said: "We expect rental transaction volumes to remain stable, and perhaps see a slight increase for the rest of 2012. Transaction volume could continue to filter down from the CCR to RCR, and then to OCR."

Savills' Mr Cheong agreed, noting that as more shoe-box apartments, which command higher dollar psf rentals, are completed and rented out, they could result in rental rates increasing.

In a report released earlier this week, Savills noted that although hiring has slowed, many businesses which have traditionally relied on expatriate employment are expected to take time to restructure their manpower needs. Consequently, more tenants have been renewing their leases for shorter terms of six months to a year.

In addition, surging home prices and the implementation of the additional buyer's stamp duty has fuelled leasing demand.

"The rental rate for non-landed homes may continue to rise in the coming months by another 1-2 per cent," said Savills.

Based on deals closed by the company, average rent for studio apartments and one-bedroom units averaged $6.21 psf per month in Q1 2012.

In particular, selected small-format units, particularly centrally located properties, were seen to fetch attractive rents. A 600 sq ft unit at The Suites at Central along Devonshire Road for instance was rented for $5,000 per month ($8.33 psf per month) while two 592 sq ft units at Martin Place Residences along Martin Road were let at $4,200 per month ($7.09 psf per month).

The report added that rents were equally attractive among the smallest units: "Three 334 sq ft units at Prestige Heights along Balestier Road were let for between $2,200 and $2,450 per month."

DC33_2008
03-05-12, 21:59
Not just increase in volume but even rental too. Just renewed a tenancy agreement today.:D

kane
03-05-12, 22:38
Not just increase in volume but even rental too. Just renewed a tenancy agreement today.:D

What was the percentage increase?

phantom_opera
03-05-12, 23:07
Singapore’s inflation is one of the highest in Asia, and that is unusual, if not unprecedented,” said Robert Prior-Wandesforde, an economist at Credit Suisse

Allthepies
04-05-12, 07:38
Singapore’s inflation is one of the highest in Asia, and that is unusual, if not unprecedented,” said Robert Prior-Wandesforde, an economist at Credit Suisse
why is it unusual? can share ur insights?

radha08
04-05-12, 07:40
What was the percentage increase?

between 1 to 100%....:D:D:D

radha08
04-05-12, 07:41
Singapore’s inflation is one of the highest in Asia, and that is unusual, if not unprecedented,” said Robert Prior-Wandesforde, an economist at Credit Suisse
only car n property prices inflated...:cool:

hyenergix
04-05-12, 07:43
Not just increase in volume but even rental too. Just renewed a tenancy agreement today.:D

Urs is big unit or MM, pls?

DC33_2008
04-05-12, 23:22
10% as tenant is staying alone in a 2-bedder condo and always pays rent on time. :)
Urs is big unit or MM, pls?

kane
04-05-12, 23:31
10% as tenant is staying alone in a 2-bedder condo and always pays rent on time. :)

when was the last time you did an adjustment? 2 years ago?

DC33_2008
04-05-12, 23:48
2 bedder at $5psf.
when was the last time you did an adjustment? 2 years ago?

hyenergix
05-05-12, 06:48
2 bedder at $5psf.

Assuming 700 sqft, that was $3.5k pm. Now it is about $3.85k. Your tenant must be quite rich.

minority
05-05-12, 07:00
Clift is asking $9 per square feet.

DC33_2008
05-05-12, 08:05
Assuming 700 sqft, that was $3.5k pm. Now it is about $3.85k. Your tenant must be quite rich.It is a much larger unit and in city fringe. Tenant is quite senior and in the better paid industry.

Komo
05-05-12, 08:48
It is a much larger unit and in city fringe. Tenant is quite senior and in the better paid industry.
walking distance to work place and always work very late:D :D

hyenergix
05-05-12, 08:57
U mean mamasan?

DC33_2008
05-05-12, 11:44
walking distance to work place and always work very late:D :D
Meeting him tomorrow to sign the agreement and to see the condition of my apt. He works near marina area. I am glad there will be no expatriate clause.