Category Archives: Rental / Lease

Apartment vacancy rates in Singapore are almost at a 10-year high

Posted on 6 Sep 2015 | Comments Off on Apartment vacancy rates in Singapore are almost at a 10-year high

Apartment vacancy rates in Singapore are almost at a 10-year high, with about 9.2 percent of units sitting empty in Q2 2015, the highest since a 9.8 percent rate was recorded in end-2005.

The rise in vacancy rates may be due to the record number of home completions. In 2014 alone, 19,941 private homes were completed while another 42,606 units are expected to be completed this year and in 2016, of which 96 percent are non-landed homes, according to SLP Research.

The oversupply is partly a result of the government’s efforts to cool the residential market.

And as housing demand fails to grow along with supply, rents are expected to remain under pressure.

As such, the government has made fewer development sites available for sale. But units on the land sold only enter the market after four to five years.

Meanwhile, immigration is key to boosting demand, although the idea is widely unpopular.

The government has been restricting the number of people coming to Singapore, a policy which has contributed to higher vacancy rates.

The slowdown in the global economy is also making matters worse.

Many agents are faced with lease terminations for expats working in industries faring poorly like oil and gas and banking.

In fact, demand could be further hit by a new policy unveiled by the Ministry of Manpower. Late last month, the ministry announced it would raise the minimum salary cap for foreigners working in Singapore to apply for visas for their family members.

Nonetheless, market watchers note that the government has shown signs of softening its stance.

Speaking at a dialogue last month, Prime Minister Lee Hsien Loong said it makes economic sense to accept foreign labour as well as immigrants, even though it may be emotionally hard to accept. “We need to make the best possible decision for Singaporeans,” he noted.

Decisions in this area impact housing, the outlook of which is bleak should demand fail to grow. With the non-landed vacancy rate likely to hit 10 percent by end-2015, SLP Research expects the woes of property developers and landlords to continue.

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Shoebox influx in 2017

Posted on 6 Sep 2015 | Comments Off on Shoebox influx in 2017

Investors of shoebox units may face some difficulty renting them out, reported The Straits Times.

This is because a bumper supply of shoebox units are expected to enter the market, peaking by around 2017, revealed R’ST Research data. Leasing demand for such units is also untested, with fewer foreigners able to afford them.

“Increasingly, many (overseas nationals) can’t even afford renting a single shoebox unit, but would instead rent a room in an apartment… Rents will be under further pressure,” noted Alan Cheong, research head at Savills Singapore.

Based on caveats lodged, majority of the supply will come from District 19 – Sengkang, Hougang and Punggol – with at least 700 units expected to be completed during this period.

R’ST Research noted that at least 527 shoebox units could come from District 14, and at least 383 units from District 12. Over in the suburbs, districts 17 and 22 will contribute at least 224 units and 151 units respectively.

In the Guillemard to Changi Road area (Districts 14 and 15), Cheong stated that prices of newly-completed shoebox units stood at around $1,350 psf in 2013, increasing to more than $1,400 psf late last year and this year.

However, rents for such units fell from $2,600 per month in 2013 to around $2,000 to $2,200, bringing the gross yield down from 5.2 percent in 2013 to 4.1 percent.

Most shoebox owners have holding power, opting to keep their units rather than sell them at a low price. Hence, yields have more room to fall into the mid-three percent level in more accessible areas such as District 14, where rents stood at less than $2,500 per month.

“Once we venture into the new developments in the outlying HDB estates, the market is untested. There, yields may tend closer to three percent or even dip below that,” said Cheong.

Overall, prices of shoebox units fell by about 10 percent from their last peak in August 2013, based on flash estimates of the NUS Singapore Residential Price Index. Prices dropped about 1.1 percent in June from the month before.

R’ST Research director Ong Kah Seng said while prices of shoebox units keep falling due to growing supply, such units are still relevant.

“These tend to be occupied by younger tenants or owners, who will bring energy to the development and area – especially important for newer residential areas like Bartley, or those undergoing rejuvenation like Hillview and Lakeside.”

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