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RESIDENTIAL MARKET

Record 45,000 leases signed but rent hikes ease

Published on Jan 28, 2012

By Esther Teo, Property Reporter


IT WAS a stellar year for the residential rental market with a record number of leases inked last year.

An analysis of Urban Redevelopment Authority (URA) data by property consultancy Savills Singapore found that 45,062 leases were signed last year.

That was an 8.4 per cent jump on 2010's 41,573 leases - itself a record.

One key factor was Singapore's growing stature as the regional Asia-Pacific headquarters for firms, including multinational companies, said Savills head of residential leasing Patrick Lai.

More senior executives are relocating here as some companies shift their staff here from more expensive cities such as Hong Kong and London. Savills has also seen more lease renewals, Mr Lai added.

Rents though were not quite as strong.

Private housing rents inched up 0.4 per cent in the three months to Dec 31, slowing from the 0.8 per cent increase the quarter before, URA data released yesterday showed.

City fringe non-landed homes posted the largest gain of 1.2per cent while semi-detached homes was the only segment to show a rental dip of 0.2 per cent.

For the full year, however, private housing rents rose by only 3.8 per cent compared to a leap of 17.9 per cent in 2010. Suburban rents took the lead with a 4.7 per cent rise, followed by 3.5 per cent for city fringe areas and 2.6 per cent for city centre homes.

Experts say the slowdown in rent increases could be due to the large supply of properties available in the market.

DTZ's head of Asia-Pacific research, Ms Chua Chor Hoon, noted that the vacancy rate for non-landed homes has risen for a third consecutive quarter, from 5.5 per cent in the first quarter of last year to 6.8 per cent in the fourth.

This is against a backdrop of a 20 per cent year-on-year increase in the number of home completions to 12,469 units last year - the highest number since 1997.

About 50 per cent of these completions are also in the prime districts of 9, 10 and 11 and the downtown and Sentosa areas. This is a much higher proportion compared to the 33 per cent in 2009 and 37 per cent in 2010, she added.

This has led to rents of non-landed homes in the city centre growing at a slower 0.1 per cent quarter-on-quarter in the three months to Dec 31, compared to a 0.5 per cent gain in suburban areas.

'While the pressure is currently greater on city centre rents, it is likely to shift to the suburban areas in three to four years' time,' she said.

'Based on URA's statistics, more than 12,000 units will be completed per year between 2012 and 2015. And more than 60 per cent of the expected completions in 2015 and about 80 per cent of the expected completions in 2016 are from government land sales projects due to the ramp-up in the programme since the second half of 2010,' Ms Chua noted.

Experts say the rental market is expected to remain 'healthy' this year.

Savills' Mr Lai said the introduction of cooling measures last month which require foreigners buying homes to pay an additional buyer's stamp duty of 10 per cent might result in more foreigners turning to the rental market instead to avoid paying the additional tax.

However, while volumes are expected to hold firm, rents might see a mild correction of 5 per cent this year as more residential projects are completed, he added.