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Luxury rents may drop 8-10%

Posted on 23 Apr 2015 | Comments Off

The slowdown in demand for high-end homes has exacerbated the already weak leasing market, said a Colliers International report.

In Q1 2015, the average monthly gross rent for luxury and super luxury apartments fell 2.2 percent quarter-on-quarter, following a 0.8 percent drop on quarter in Q4 2014.

The report noted that newly completed homes and unsold inventory competed with existing stock to vie for a limited pool of tenants who mainly comprise existing tenants searching for alternative accommodation. New expatriate arrivals also remained limited due to tight immigration policies.

Notably, more tenants are looking for bigger apartments at the same rent, leaving landlords hard pressed to revise rents downwards or accommodate home improvement requests to secure renewals, noted Colliers.

Meanwhile, the weak buying sentiment has also forced property developers to withhold launches and put up units for lease instead, adding to the growing supply of homes in the rental market.

As a result, average monthly gross rents of luxury and super-luxury apartments are expected to drop by around eight to 10 percent in 2015.

“With landlords getting the shorter end of the stick, a tenant’s market is likely to persist,” added the report.

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Posted in Rental / Lease

Tagged High-end homes, Rental, Rents, tenants, tight immigration policies

Rental yield for shoebox units in suburbs reasonably high

Posted on 3 Dec 2014 | Comments Off

The rental yield of shoebox units in the suburbs are comparable to those in the city, said property analysts and reported in the media.

However, they caution that landlords may not get the kind of rental income they expect in the near future, considering that the Urban Redevelopment Authority (URA) predicts around 11,000 shoebox units by end-2015.

Measuring less than 500 sq ft in size, shoebox units are typically one-bedroom units with a bathroom.

Alan Cheong, Head of Research at Savills Singapore, said the rental yield of shoebox units in the suburbs are about three percent compared to the two to three percent yield of other types of private homes.

He noted shoebox units are particularly popular among single expatriates because their companies either hired them on local employment terms or have slashed their housing budget.

Shoebox units priced within $2,000 to $3,000 are at an advantage, said Cheong.

Chris Koh, Director of Chris International, noted while the appeal of such units continues to be strong among investors, he warns that tenants have other choices. “With a budget of $2,500 to $3,000, there are some outskirt condominiums with two and three bedrooms that they can rent. So, they do make comparison with these shoebox units because these units are rather small.”