http://www.straitstimes.com/archive/...homes-20131214

Rental market slows with surge in new homes

Landlords feel the heat even in areas where rent has generally held firm

Published on Dec 14, 2013

By Cheryl Ong


A FLOOD of new flats on the market is forcing landlords to lower rents across Singapore, even in areas like Marine Parade and River Valley that have traditionally enjoyed strong demand.

The tighter market, which promises to get worse in the next couple of years as new units continue to be released, also means landlords have to wait longer to find a tenant.

"Landlords, especially those who bought resale units at high prices, are slightly reducing rents to attract tenants," said R'ST Research director Ong Kah Seng.

The slowing rental market was underlined with numbers from the Urban Redevelopment Authority that were released for the third quarter. Residential rents rose just 0.2 per cent in the July to September period, slightly down from the 0.3 per cent increase in the preceding quarter.

Experts said one key reason for the flattening market is a surge in supply that left 17,458 vacant units for rent at the end of the third quarter.

The 19,302 private homes that will be ready next year and the 19,727 units in 2015 will only increase leasing competition in an already stiff market, they added, also noting that tough labour policies are expected to hit the rental sector next year.

Just a year ago, a fully furnished three-bedder at Cote d'Azur in Marine Parade could fetch a monthly rent of $5,500, said Mr Chris Koh, director of property consultancy Chris International. A similar unit now would be rented out at $5,200.

The decline is starker for smaller units. Two-bedders that could command $3,000 a month a year ago are being rented at $2,700 - a 10 per cent dip.

Upcoming completions at nearby projects like Silversea and The Shore Residences will add at least 790 units to the housing stock in Marine Parade, which will make the landlord's lot a harder one.

Mr Ong said owners of newly completed properties are tempering their rent expectations, to secure tenants in the initial term to offset mortgage payments.

Already, the time taken to rent out a condo unit has increased from one to two months, noted Mr Koh.

Landlords are feeling the heat even in districts traditionally popular with expatriates.

Property agent Lawrence Teo said a tenant had renewed his lease for a four-bedder at Aspen Heights in River Valley Road at $5,000, down from $5,700 two years ago. However, he noted that rentals in the area have generally held firm, although there are signs of stiff competition from new projects.

The 108-unit RV Edge nearby recently received its Temporary Occupation Permit with rents already lower than expected.

Mr Koh noted that a 366 sq ft apartment in the area used to rent for $2,800 to $3,000, but advertisements for the project are asking for $2,500 to $2,700.

He added that the potential supply overhang could be aggravated by an increasing number of Housing Board units available for rent.

"HDB upgraders moving out from their flats to these completed condos are also putting their former homes up for rent, adding to the rental supply," he said.

Savills Singapore research head Alan Cheong said "the rental market is on the cusp of a turning point", and he expects rents to decline by 5 to 10 per cent next year.

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