City fringe homes drive rental growth

Leasing demand in the private residential market remains healthy, according to a new Savills report today.

Rental volumes islandwide increased by 4 percent year-on-year, as the Urban Redevelopment Authority (URA) showed there were 13,077 leases of private residential homes, excluding executive condominiums, in Q1 2014.
37 percent (or 4,839 leases) of these were in the city fringe areas, higher than the 30.6 percent and 32.4 percent recorded in the Outside of Central Region (OCR) and Core Central Region (CCR) respectively.

Residential properties in the city fringe areas are probably more appealing as expatriates in Singapore try to balance tighter rental budgets with accessibility factors.

“These housing options likely fit better to their current budgets, yet still remain conveniently accessible from the city area. Tenants these days are also offered a wider variety of locations in the Rest of Central Region (RCR) to pick from, as there is an increasing number of newly completed developments,” the report explained.

Rental volumes by market segment, 2004–Q1/2014

The overall rental index of private residential properties continued to ease 0.7 percent quarter-on-quarter (QoQ) in Q1 2014.

The vacancy rate climbed to 6.6 percent from 6.2 percent in the previous quarter, which translated to 19,284 vacant units out of the current 293,283 private homes available throughout Singapore. The increase was mainly due to the spike in the East region, whereas vacancy rates either remained flat or declined in the other regions.

More pressure on residential rents is expected this year, especially in the high-end market, as expatriates’ housing allowances continue to be trimmed, as well as the increasing number of newly completed high-end projects.

However, the expected rise in Singapore’s economy should help to support the pace of growth in private residential leasing demand although rents could remain flat or soften due to increasing supply and the tighter rental budgets.

Alan Cheong, Senior Director of Savills Research, said, “A stalemate has developed wherein increasing new supply and tighter rental budgets face off against an improving economy.”

Source : PropertyGuru

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