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Thread: Condo rents fall for 11th month

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    Default Condo rents fall for 11th month


    [B][SIZE=5]Condo rents fall for 11th month[/SIZE][/B]

    Published on Jan 15, 2015 1:15 AM

    By Cheryl Ong

    PRIVATE condominium rentals continued to be hammered last month as weak leasing demand and a mounting supply of new apartments weighed on the market.

    Rents of non-landed private apartments slid for the 11th month in a row, falling 0.8 per cent in December last year compared with the preceding month, SRX Property's flash estimates showed yesterday.

    Compared with December 2013, rents were down 5.3 per cent last month, said SRX, which compiles its property price index with data from property agencies.

    Rents have been falling since last February and have declined 10.1 per cent since their peak in January 2013.

    Fewer leases were inked last month as well, with an estimated 2,968 units let out - down a slight 2 per cent from 3,026 in November. However, 14.1 per cent more leases were signed last month compared with the 2,601 units rented the same period a year earlier.

    Apartments in prime central areas dragged overall rents down with the steepest drop at 1.2 per cent, compared with a 0.4 per cent slip in November, while those in the city-fringe areas fell by 0.6 per cent over a 1.1 per cent drop for the same period.

    Suburban units held up better with a 0.3 per cent dip, after easing 0.9 per cent in November.

    Ms Christine Li, research head at OrangeTee, said a sizeable number of shoebox units launched in 2010 are now being completed in city-fringe and central areas, while luxury units are facing high vacancy levels.

    Of the 12,097 shoebox units sold since 2009, about 47 per cent were in city fringe areas and around 37 per cent in the suburbs.

    "In the city centre, supply is abundant but demand is not as high as before because expatriates are not getting enough housing budgets," said Ms Li.

    Demand for homes with rents in excess of $10,000 is "really bad", she said, such that the gap between rents in the city centre and city fringe is slowly narrowing.

    But a looming supply glut is set to hit the suburbs this year, with more than half an estimated 25,000 new homes expected to be completed in the suburbs by the end of the year.

    Owners at projects such as Parc Rosewood in Woodlands and Eight Courtyards in Yishun have recently been given the keys to their new homes, for instance.

    "Owners of newly completed condominiums are expected to cut rents significantly to attract tenants, so there will be some flight to quality, (especially) within the same locality, said Mr Ong Kah Seng, director of R'ST Research.

    "As there will be even more substantial private residential properties completed in 2015, it is expected that non-landed private residential rents will fall by up to 8 per cent for the whole of 2015."

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    [B][SIZE=5]Non-landed private home rents down 6.4% in 2014[/SIZE][/B]

    [B]For HDB flats, SRX's rental index declines by 2.1 per cent for the whole of last year[/B]

    By Jamie Lee [email][email protected][/email]@JamieLeeBT

    15 Jan

    RENTS of non-landed private residential properties have shown continued decline since February last year, falling 0.8 per cent in December compared to November, flash estimates from Singapore Real Estate Exchange (SRX) showed on Wednesday.

    This translates to a 6.4 per cent fall since the start of the year, and a 10.1 per cent decline from the peak in January 2013.

    There could be more weakness this year, with rents expected to fall up to 8 per cent for the whole of 2015, said Ong Kah Seng, director at R'ST Research, pointing to the substantial number of private residential properties completed this year.

    "Weak demand for private residential properties will persist with tightening in foreign labour including working professionals," he said in a media statement. "The fall will be most pronounced in the core central region as companies are cutting back on housing allowances."

    As it is, rents in the core central region fell 1.2 per cent in December over the previous month - registering the sharpest decline compared to those seen in the rest of central region and outside central region. Rents in those areas fell 0.6 per cent and 0.3 per cent respectively.

    On a year-on-year comparison, rents in December were down 5.3 per cent from 2013.

    The fall in rents is within expectations, given the drag from both the lull during the festive period and fewer expatriates settling in here compared to the first half of the year.

    The reality of higher leasing competition due to increased completions from this year is also sinking in for landlords, translating to lower rentals, said Mr Ong.

    "Newly completed condominiums are expected to cut rents significantly to attract tenants, so there will be some tenants' flight to quality space within the same locality," he added.

    "As rents of older apartments fall, their competitive edge will be that they offer comparatively larger bedroom (or apartment size) at lower rents compared to new completions nearby. Cost-savvy tenants especially Asian foreign professionals will appreciate this merit about older apartments."

    The SRX rental index for HDB flats dipped 0.4 per cent in December over the previous month, and by 2.1 per cent for the whole of 2014.

    "HDB flat rents are expected to continually dip in 2015, due to increased flats put up for subletting - as more flat owners move into completed suburban condominiums and put the HDB flat up for subletting," said Mr Ong.

    He expects a rental fall of up to 7 per cent this year, with rents of HDB flats offering a better match to tenants' affordability by the end of 2015.

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