Tuesday, March 29, 2011

Rents in Singapore softens in 2011

On March 7th we have wrote about the rents in Singapore in the article named "Rent in Singapore may fall in 2011".  We have written that supply (rental flats and houses) and demand (tenants) head to an imbalance state where supply will exceed the demand and rents would fall in 2011.

Now 3 months into 2011, Knight Frank reports at  0.4%, 3% and 0.8% quarter-on-quarter increase in high-end, mid-end and mass market segments. Although these figures shows rents were flat in Q1 2011, they are significantly lower than 5.6%, 2.6% and 4% recorded in 4Q 2010 and may well point to a rental fall in the near future.

Knight Frank points several downward pressure on the residential rents:
  1. Stricter criteria for foreigners working in Singapore
  2. Shrinking housing allowances for expatriates
  3. Increased supply from newly completed residential homes
Will the rents in Singapore fall? If there will be a fall, when? It depends on the demand side, which in turn depends on the response of businesses to stricter foreign employee criteria. There will still be foreign influx but probably less than the previous year and the rentals will fall if new the influx is not fast enough to catch up with new home supply.

OrangeTree in a report dated in October 2010 predicted a softening in second half of 2011 (which came one quarter earlier):

"With overall occupancy rate at 94.8% remaining above historical average of 93% and lower completions in 2011, the rental market could remain tight at least until 2nd half 2011. Thereafter, we expect rents to soften in view of the surge in completions in 2012-2014." 
Source: Singapore Rental Market

See related articles:
  1. Bumper supply is on the way for Singapore private property
  2. Rent in Singapore may fall in 2011

This blog article is to provide general information only and should not be treated as an invitation to buy or sell any property or as sales material.  Users of this report should consider this report as a one of the many factors in making their investment decision. Users should make reference to other sources of information and specific investment advice to obtain a more objective view of the property market. Asia Singapore shall not be responsible for losses suffered.

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