Rents at new completions within the city fringe area appear to be holding up, while rents at suburban condos are increasingly feeling the pressure, reported The Straits Times.
This comes as tenants move into more affordable units in central locations, often going for newer condos as well, said experts. “Suburban projects, and projects which do not have large-scale facilities, may lose out in the chase for tenants. Older developments are also losing tenants to newer developments,” said ERA Realty key executive officer Eugene Lim.
D’Leedon in Farrer Road, which was completed in Q4 2014, posted a median rent of S$4,288 per month in Q2 (S$3.57 psf per month), according to recent property data. While Lim described the rents as “decent”, they were still lower compared to rents at the nearby five year-old estate of Waterfall Gardens, which registered a median rent of S$3.92 psf per month in Q2.
Ku Swee Yong, CEO of Century 21, said the relatively lower rents at the 1,715-unit D’Leedon reflected the stiff competition for tenants after the project was completed in Q4 2014, which was also the period in which the rental market was on the downtrend. “Waterfall Gardens…does not have smaller units of one-bedroom or studios, so there is a certain amount of prestige even though it is older,” he said.
Meanwhile, rents at suburban areas were generally lower. Median rents at Woodhaven in Woodlands, which was completed in Q1, stood at $2,100 per month ($2.98 psf) in Q2, while the those at the nearby Casablanca were lower at S$2.65 psf, though quantum rents were on a higher median at S$2,800 for bigger units.
Median rents lower than S$3 are considered low, said Lim, noting that the tight labour rules led to a “very practical” leasing market in which tenants opt for 12-month leases. Growing completions will also continue to affect rents. “The mid-range budget of S$3,000 to S$6,000 is the most active, and within that range, a tenant will try to get the best possible deal.”
As such, suburban rents face more pressure compared to those within the central or city fringe areas, although bigger central city units may also be feeling the pressure, as fewer tenants can afford a monthly rent of around S$10,000.
“There are definitely headwinds in the upcoming demand for rental units,” Ku said, “With commodities at an all-time low and headwinds in financial services as well, expat headcount is likely to be flat, if not dropping.”