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5 highest yielding rental properties in Singapore

Posted on 28 May 2015 | Comments Off

Overall gross rental yields of non-landed private homes in Singapore range from 2.7 percent to 3.9 percent, according to an OrangeTee report.

Based on developments tracked by the consultancy, average rental yields in the Core Central Region (CCR) are about 2.7 percent to 3.5 percent, while the Rest of Central Region (RCR) are around 2.8 percent to 3.6 percent. But projects in the Outside Central Region (OCR) command the highest rental yields of between 3.2 percent and 3.9 percent.

In addition, there are 34 non-landed developments in the city-state that have rental yields of at least four percent and these rental gems have common characteristics. First, the majority (19) are located in the OCR, given the lower prices of suburban properties.

“As prices are one of the main determinants for rental yields, and since prices in the suburbs are usually relatively lower compared to the central region, the rental yields for suburban projects tend to be higher,” noted OrangeTee.

Second, 29 or 85 percent of them are 99-year leasehold projects due to the relatively lower psf price versus freehold homes.

“As tenants are generally not concerned about the tenure of the property, leasehold properties tend to have an advantage as compared to freehold when looking purely at rental yields,” shared the consultancy.

Developments with a large proportion of shoebox units also have higher gross rental yields. Suites @ East Coast has a large proportion of units under 50 sqm and has the highest rental yield of 5.7 percent among the 34 non-landed projects.

“However, one should not blindly jump onto the shoebox bandwagon. The performance of shoebox units is not homogeneous across the market, one should consider the rental demand and available supply of such units in the vicinity,” stated the report.

Interestingly, 20 of the 34 non-landed private residential projects are not within walking distance of 400 metres or less from an MRT station.

“This is understandable because projects located near MRT stations command a premium over projects located further away,” said OrangeTee. Although some tenants are willing to pay higher rents for a convenient location, there may be differences in rental and sale premiums.

“This would explain why projects that are relatively inaccessible are still able to command high rental yields,” added the report.

The non-landed developments studied have more than 100 units, while the resale prices span from Q2 2014 to Q1 2015. To mitigate the effects of outliers that could skew rental yields, projects with fewer than 20 rental transactions and five resale deals were excluded. Privatised HUDCs and executive condominiums (ECs) were also omitted. Consumers should note that gross yields do not include other costs, such as maintenance fees and vacancy costs.

Below are the top five non-landed private residential projects with the highest gross rental yields.

1. Suites @ East Coast
Region: OCR
District: 15
Close to MRT: No
Tenure: Freehold
Average Rent: $5.42 psf
Sales Price: $1,140 psf
Estimated Gross Yield: 5.7 percent

2. The Clift
Region: CCR
District: 1
Close to MRT: Yes (Tanjong Pagar)
Tenure: 99-Year
Average Rent: $7.36 psf
Sales Price: $1,858 psf
Estimated Gross Yield: 4.8 percent

3. Vista Park
Region: RCR
District: 5
Close to MRT: No
Tenure: 99-Year
Average Rent: $3.44 psf
Sales Price: $886 psf
Estimated Gross Yield: 4.7 percent

4. Park West
Region: OCR
District: 5
Close to MRT: No
Tenure: 99-Year
Average Rent: $2.87 psf
Sales Price: $745 psf
Estimated Gross Yield: 4.6 percent

5. Rivervale Crest
Region: OCR
District: 19
Close to MRT: No
Tenure: 99-Year
Average Rent: $2.81 psf
Sales Price: $759 psf
Estimated Gross Yield: 4.4 percent

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Posted in Rental / Lease

Tagged PARK WEST, Private Residential Property, Rental, Rental Property, rental yield, Rivervale Crest, Suites @ East Coast, The Clift, Vista Park

Foreigners return to buy luxury property

Posted on 28 May 2015 | Comments Off

Private residential properties priced above $5 million accounted for 19 percent of private homes acquired by foreigners in April, an increase from Q1 2015’s six percent, according to DTZ’s analysis of URA Realis caveat data and reported in the media.

Although the absolute volume of transactions is low, the figure is expected to rise as more caveats are lodged.

In April, seven of the 36 caveats lodged by foreign buyers of private homes were above $5 million. In comparison, nine of the 145 caveats lodged by foreign buyers in Q1 2015 were for homes priced above $5 million. The share steadily increased from a low of three percent in Q2 2014.

Lee Nai Jia, associate director of research at DTZ said: “The findings support what has been observed on the ground, where there is an increase in foreign investors displaying interest in luxury apartments.

“Despite facing higher stamp duties to buy properties in Singapore, foreign investors continue to be drawn to the republic’s transparent property market. There is also more smart money flowing in, as investors scour for value-for-money properties.”

According to George Tan, senior director at Savills Residential, “A good proportion of buyers are foreigners including PRs (permanent residents). Many of them are China buyers who are Singapore PRs.”

In agreement, Joseph Tan, executive director (residential) at CBRE stated: “PRC citizens with Singapore PR – that is one of the most common buyer profiles in the high-end market now.”

Majority of the said buyers may have also looked at Hong Kong.

“Singapore and Hong Kong have introduced similar sort of property cooling measures. However, the Hong Kong market, which has seen a rebound in home prices over the past one and a half years, is now looking toppish. In comparison, Singapore property, following price declines, offers better value,” said CBRE’s Tan.

DTZ’s analysis of URA Realis caveats data downloaded on 14 May shows that China buyers are flocking to District 10 again. Notably, 17 percent of the 48 private homes bought by China buyers last month were located in District 10, up from seven percent in Q1 2015 and 10 percent in the previous quarter.

Looking ahead, Savills’ Tan expects the promising recovery of foreign buying in the luxury residential market to continue.

“Prices are still at a low point and there are a lot of savvy, rich people on the lookout for good investment opportunities to take a position just before the market turns. This is the correct time for the rich (to enter the market),” he shared.