Rental market turning to favour tenants: Savills

[reporter2]

http://www.businesstimes.com.sg/prem...vills-20131126

Published November 26, 2013

Rental market turning to favour tenants: Savills

Home completions, labour curbs cited; but demand may be strong for 6 months

By ong chor hao [email protected]


THE residential leasing market is gradually turning to favour tenants, even as there is likely to be strong demand over the next half a year, a report by Savills cautioned.

"The rental market is hitting turbulence as more completions stack up and tighter controls on the overseas labour workforce are implemented," said Alan Cheong, head of research at Savills Singapore.

The rental market was buoyant in the third quarter of the year. There were 15,083 rental transactions - a record number and an 11.6 per cent increase from the previous quarter.

This was attributed to factors such as the 5.1 per cent growth in GDP for Singapore year-on-year, lower unemployment rates, and foreign nationals bringing forward plans to relocate here in light of the Fair Consideration Framework (FCF) which will take effect next August.

Savills expects leasing demand to stay strong in Q4 in the range of 11,000 transactions, a number similar to last year.

The FCF will require every company with more than 25 employees to advertise job openings on a new government-sponsored job bank before applying for a new Employment Pass (EP).

While the framework applies to jobs with monthly salaries below $12,000, "it is foreseen that from the start of next year, the number of overseas nationals in Singapore will decline further, as EP holders will soon face more difficulties in getting approvals on both fresh and renewed applications", the report said.

These factors come against a backdrop of higher vacancy rates and slower rental growths.

In Q3, 6.1 per cent of private homes, or 17,459 units, were vacant, up from 5.6 per cent in Q2. This came on the back of several big projects such as the 1,040-unit The Interlace on Depot Road, the 429-unit Tree House on Chestnut Avenue and the 302-unit Cape Royale at Sentosa Island getting their temporary occupation permit.

Another 26,000 homes are scheduled for completion, and as leasing demand starts to ease from next year, Savills said that "the new housing stock may not be absorbed as quickly, and thus, the number of vacant private homes is expected to increase further".

As for rents, the overall index for private residential properties from the Urban Redevelopment Authority showed a 0.2 per cent growth in Q3, down from 0.3 per cent in Q2. The average monthly rent of high-end condominiums tracked by Savills was flat at $4.86 per square foot.

"Rents in the high-end and luxury segments could face more pressure due to the lukewarm demand for such homes during the year-end festive season, as well as competition from new supply," Savills said.

[thomastansb]

My rental dropped from 4.5k to 4.2k as compared to 1 year ago at Citylights. But turnaround is pretty quick. The new tenant move in 1 week after the old one left. But 6.6% lower rental.

[radha08]

My rental dropped from 4.5k to 4.2k as compared to 1 year ago at Citylights. But turnaround is pretty quick. The new tenant move in 1 week after the old one left. But 6.6% lower rental.

but ur mthly instalment 1.7k...so still happy

[thomastansb]

I bought many years ago with 40 years loan. So quite manageable for now.

but ur mthly instalment 1.7k...so still happy

[kane]

6.6% rental yield cannot find anywhere nowadays.

[Mu]

My rental dropped from 4.5k to 4.2k as compared to 1 year ago at Citylights. But turnaround is pretty quick. The new tenant move in 1 week after the old one left. But 6.6% lower rental.

Congrats

[catsick]

this 26k supply for next year is a lot , with most of the 15k of rental transactions probably renewals it means there is going to be a lot of competition to get a tenant , rental prices went up a lot in 2006/2007 when there was a huge number of new FT arriving with basically zero new supply of property and a lot of property being knocked down due to en blocks , now there is going to be limited supply of new FT allowed in but massive supply of new condos being completed ( basically 8 years late ) I suspect there will be a move down in rents back to levels more like 2006 times , with low interest rates the lower rent should not cause too much pain, however if rates go back up again there will be major pain and the CM will have to be undone !

[Rosy]

this 26k supply for next year is a lot , with most of the 15k of rental transactions probably renewals it means there is going to be a lot of competition to get a tenant , rental prices went up a lot in 2006/2007 when there was a huge number of new FT arriving with basically zero new supply of property and a lot of property being knocked down due to en blocks , now there is going to be limited supply of new FT allowed in but massive supply of new condos being completed ( basically 8 years late ) I suspect there will be a move down in rents back to levels more like 2006 times , with low interest rates the lower rent should not cause too much pain, however if rates go back up again there will be major pain and the CM will have to be undone !

I will not say down to 2006 levels. 3rm flat in 06 fetch about 1.3-1.5k and currently 2-2.3k. However rental should be going down abit next year due to your valid reasons. The only possible relief would be from the govt releasing the tap.