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Rental market here on road to recovery

Posted on 24 Sep 2009 | Comments Off

Homes in districts 9, 10 and 11 are seeing more rental enquiries now that prime rents have fallen

BUFFETED by so much negative economic data, the residential rental market inevitably succumbed, with rents falling sharply by 8.5 per cent in the first quarter, and another 5.3 per cent in Q2. While the decline may be showing the first signs of easing, the leasing market remains depressed given the lingering concerns about the large number of new homes coming on stream.

Housing supply is perhaps the biggest influence on rentals. New home completions this year are expected to exceed 11,000 units, going by data from the Urban Redevelopment Authority (URA). On the other hand, the average long-term take-up stands at about 7,200 units a year. While this demand-supply imbalance will weigh on rents, the relatively smaller number of completed units expected next year (just over 5,000 units) may provide some reprieve, allowing the market to digest the excesses and rents to stabilise.

Also, the estimated number of completed units in 2011 and 2012 may be lower than stated given that some projects have yet to begin construction. Nevertheless, the supply pipeline is strong enough to keep the rental market in check, with any significant rise in asking rents by landlords likely to be faced with tenant resistance.

However, leasing demand in the past few quarters continued to be robust, underpinned by falling rentals. Leasing volume in July hit a record high of 4,252, about 11 per cent more than the previous record of 3,846 set in August last year.

This comes after a strong Q2 of more than 10,300 leasing transactions, just below the all-time high of 10,900 done in Q3 2008. What is even more encouraging is that the islandwide vacancy rate remained unchanged at 5.9 per cent as of Q2 2009, despite the large number of units completed so far this year (over 6,000 units). This is a testament to the depth of housing demand. Continue reading →

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Posted in Luxury Property, Property Market / Real Estate

Tagged Singapore Property, Singapore Property Market, Singapore Rental, Singapore Rental Market

Recession, what recession?

Posted on 24 Sep 2009 | Comments Off

Increased sales strongly suggest that buyers are convinced property prices have bottomed, or are low enough for them to re-enter the market, writes EMILY ENG

GIVEN the recent euphoria in the residential market, it is no surprise that it has become a hot topic of discussion. Isn’t Singapore still in recession, people wonder. Unemployment is still high, with an estimated 116,600 jobless residents as at June this year.

And while gross domestic product (GDP) forecasts have been revised upwards from an initial minus 9 per cent to the current minus 4 per cent, the ‘improvement’ is still a negative figure. But none of this has dampened the buoyant mood of buyers and the flurry of launches.

So what’s driving this burst of buying, and is speculation rampant? We take a look at the situation, with our focus on the upper-mid to high-end segment where prices average $1,500 per sq ft.

First, we compare the recent bullish market to the boom of 2007. Two years ago, the activity had started in the high-end segment, driven by foreigners eager to buy into Singapore due to the good job done promoting the city.

The buzz surrounding the two planned integrated resorts (IRs) helped boost Singapore’s appeal, leading to a record number of foreigners buying private property here.

This, coupled with pent-up demand, led the market to experience one of its most active years, with 14,811 new units sold during the year. Speculation quickly came into the picture, and the government abolished the deferred payment scheme to rein it in. But it was the global financial crisis that eventually brought the market to a standstill. Continue reading →