City fringe homes drive rental growth

Posted on 26 May 2014 | Comments Off on 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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Property players vanishing from market

Posted on 26 May 2014 | Comments Off on Property players vanishing from market

With hardly any new projects or land bids in recent years, some developers have disappeared from the scene due to financial woes and tougher competition, media reports revealed.

These boutique developers, such as Raffles Medical Group’s Esquire Land and Indonesia-oriented Sinarmas Land, were active in the 1980s and 90s, when freehold land costs less than $100 million and profit margins exceeded 20 percent, said Chesterton Singapore’s Managing Director Donald Han.

Another example is Waterbank Properties, former transport group DelGro Corp’s property division, which left the property industry in September 1998.

On the other hand, some property players are only active when the market hits rock-bottom, such as Ho Bee Land and Lippo Group. “These are the early movers who read the market well, tend to take risks and generate the highest returns,” Han explained. “When the market nears its peak, these developers and consortiums then drop off, and are replaced by the more gung-ho ones.”

NTUC Choice Homes went into a hiatus after it submitted a losing bid of $97.4 million for an HDB housing site at Pasir Ris Central in May 2011.

“In the past few years, land prices in Singapore have not moderated much,” said its spokesman. As a result, opportunities to develop affordable and quality houses were scarce.

Since its founding in 1995, the company has built 15 projects with 6,944 units, including the Dakota Residences and Trevista. Its new development, the 315-unit Belysa is expected to be completed by October.

Nevertheless, NTUC Choice Homes has a moderate risk profile, meaning it could start acquiring landbanks when prices fall, noted Han.

In contrast, some developers are active all year round such as CapitaLand, UOL Group, Keppel Land, Singapore Land, City Developments, Frasers Centrepoint and Far East Organization.

Ku Swee Yong, Chief Executive at Century 21, added, “Some developers who are listed must show a steady flow of projects, otherwise there will be certain quarters when they report revenue plunges or zero profits.”

Source : PropertyGuru

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