http://www.straitstimes.com/archive/tuesday/premium/money/story/demand-private-rental-homes-20140527
Demand up for private rental homes
But glut of vacant units means rents set to weaken or stay flat: Report
Published on May 27, 2014 2:06 AM
By Rennie Whang
DEMAND for private rental homes rose in the first quarter and could grow further as the economy improves, but the glut of vacant properties means rents will likely weaken or stay flat.
That was the state of play outlined in a report from consultancy Savills yesterday.
It noted that there were 13,077 leases signed in the three months to March 31, up 4 per cent on the same period last year.
Much of the rise was due to an 11.2 per cent increase in leases in what is called the Rest of Central Region, an area that includes Bishan, Toa Payoh, Little India, Queenstown and Geylang.
Leases signed for homes in this zone accounted for 37 per cent of all rental transactions in the first quarter of this year - its highest proportion since 2004.
Leases in the Outside Central Region - where most mass market condominiums are - also fared well, rising 1.5 per cent year-on-year to account for 30.6 per cent of total transactions.
But leases in the Core Central Region, which includes the prime districts, financial zone and Sentosa Cove, fell 1.1 per cent year-on- year to 32.4 per cent of total transactions.
"Balancing the tighter rental budgets of expatriates in Singapore with accessibility factors, (homes) in the city fringe areas are more appealing than those in other locations," Savills said.
It added that tenants also have more locations in the Rest of Central Region to pick from, with an increasing number of newly completed developments.
More than 2,500 private residential units were completed at major projects in this zone last year, including Ascentia Sky in Alexandra View, Waterbank at Dakota in Dakota Crescent, and The Interlace in Depot Road.
More pressure on rents is expected this year, Savills said, noting that the overall rental index for private residential properties has continued to fall, down 0.7 per cent in the first quarter from the preceding three months.
It said the strain will be particularly acute in the high-end market, "as expatriates' housing allowances continue to be trimmed and there is an increasing number of newly completed high-end projects (on) the market".
Suites at Orchard in Handy Road, with 118 units, and the 121-unit Loft@Nathan in Nathan Road are among the high-end projects due to be completed next year.
The average monthly rent for high-end flats tracked by Savills has been sliding since mid-2011 and it slipped a further 0.2 per cent to $4.84 per sq ft in the first quarter.
The overall vacancy rate of private homes climbed to 6.6 per cent from 6.2 per cent in the previous quarter, representing 19,284 empty private residential units.
Savills said this was mainly due to vacancies in the east shooting up from 3.4 per cent in the last three months of last year to 6.1 per cent in the first quarter this year, while rates stayed flat or declined in other regions.
The Waterview in Tampines Avenue 1 with 696 units, the 473-unit Vacanza@East in Lengkong Tujoh, and 408-unit The Shore Residences in Amber Road all competed in the east in the first quarter.
Savills added that "the anticipated robust rise in Singapore's economy should help to support the pace of growth in private residential housing".
The Ministry of Trade and Industry has forecast growth of 2 per cent to 4 per cent for the year.
[email protected]