Pipeline Supply of New Residential Units in Singapore

National Development Minister Khaw Boon Wan has posted the below chart in his Facebook. According to the post 204,461 units of residential property will be ready for occupation in 2014, 2015 and 2016. This is is 3.4% larger than the earlier projection of 197,559:

We are making good progress in our ramp-up of home building programme. The number of new public and private residential units ready for occupation in the next three years is increasing. Our earlier projection (197,559) has been outstripped. The new number now is 204,461. For this year, more than 21,000 residential units have already been built; another 9,220 units will be ready by year end.

Source : Khaw Boon Wan's Facebook Page

According to the graph 65,383 units of private residential properties, 10,435 units of Executive Condominiums and 97,551 units of HDB's will be completed in the next 3 years. Most of the flood is expected in 2016 where 73,628 units of properties will be completed.

It seems like a flood of property supply will come to the Singapore market. The Facebook post followed the news that HDB Resale Price Index (RPI) fell by 0.9 per cent in the third quarter of this year. This was a slightly bigger drop than the flash estimate of 0.7 per cent released earlier this month. The last time resale flat prices dipped was at the start of 2009, when the recession hit. Prices have been on the upward trend since and reached a peak in the second quarter of this year, when prices went up by 0.5 per cent.

Pipeline Supply of New Residential Units in Singapore

How to not pay property agent fee when renting a flat in Singapore?

Elbert is renewing his contract in the HDB flat he is renting. As he did every year, he will need to pay agent fee to the agent although he is not finding a new flat. He will simply continue in the flat he is renting but he will still need to pay for it anyway. He is not alone. I think this bizarre setting is a common in Singapore but there is a way to avoid it for tenants. Actually, the renting tip I will share here is also used when you are renting a new unit.

There are 2 types of agents in Singapore : landlord agents and tenant agents. By law an agent cannot charge agent fee from both parties. If you do not want to pay for property agent fee when you are renting a place, look for landlord agents and directly deal with them. Finding them is quite easy: just ask the agent when you call. I ask "are you landlord agent?". If the property agent you call ask you "are you an agent or tenant looking for a place?" he/she is probably a landlord agent.

I have rented my current unit like that. A new (6 years old at the time) HDB flat for 2,500 SGD per month. I found the landlord agent and directly dealed with them. So I have saved 1,250 SGD from the transaction. Later when I renewed my contract I did not pay agent fee also.

But isn't there a drawback? If a dispute arises you won't have a tenant agent to help you? Well even if you used an agent on your side in the transaction, this agent will not care a bit about your dispute with your landlord anyway. So it is not a big deal not to have a tenant agent. 

Singapore condo rents are down with huge oversupply

Thanks to a wave of newly completed condominiums, the era of ridiculously high rents for private properties in Singapore is coming to an end. According to The Straits Times, landlords faced with stiff competition for tenants, are now asking less for rentals:

At NV Residences in Pasir Ris, which obtained its temporary occupation permit (TOP) in January, landlords of three-bedroom units have lowered asking rents from $4,000 a month to less than $3,500 a month, said Mr Chris Koh, director of property consultancy Chris International.
Homemaker Angelin Loh, 46, who bought her 1,184 sq ft three-bedder there for $1.07 million in January last year, said she was unable to lease her unit for three months after collecting the keys in February.
She found a tenant only after slashing the monthly rent from $4,000 to $3,200. Ms Loh noted that the rent was just enough to cover her monthly mortgage instalments.
Source : The Straits Times, Wave of new condos drives down rents

The key reason for this is the oversupply of condos flowing into the market. Completed private units are not only increasing the supply but also decreasing the demand since some of the tenants are individuals waiting for their condominium units to be completed.

In 2013, 16,742 private residential properties will be completed in Singapore up from 10,329 units completed in 2013. 5 large suburban projects has received their TOP (Temporary Occupation Permit) in the past 6 months adding 2600 units to the supply.

Many Singapore residents and foreigners jumped to buy private homes in the high rent - low mortgage rate environment and a significant group of these buyers are investors hoping to rent their units to create a positive cash flow. In fact, even the owner occupiers add to supply of rental units since they are usually HDB owners who will rent out their HDB units once they move to their condo (or sell their HDBs to someone who will be removed from tenant demand).

The oversupply situation is much bigger if you look at overall new residential units: According to MND boss Mr Khaw Boon Wan, 197,559 new will be built by 2016! Almost 200,000:

How much is coming on stream?  Plenty!  Indeed, some 200,000 new housing units will be constructed – 80,000 private properties, 10,000 ECs and about 110,000 public housing. This is equivalent to the building of four new Ang Mo Kio towns by 2016!   And we are still building more.
Source : Enough Homes for All

Picture of Singapore home oversupply: Almost 200,000 private homes,
ECs and HDBs will be built by 2016.
Source : MND Blog

Even asking rents at older projects are being slashed:

Three-bedders at Dakota Residences at Old Airport Road, which received TOP in 2010, have been rented out for $4,700 to $5,000 a month, below landlords' expectations of $5,000 to $5,200, he said. Next door, at Waterbank@Da-kota, which was completed last month, rents for similar units have also been advertised for $4,700 to $5,000.
Source : The Straits Times, Wave of new condos drives down rents

But the rental demand is still high and increasing. Q2 2013 rental contracts were 16% higher than Q3 2013. According to experts, the increase can be due to demand for interim housing from home owners waiting for construction of their new homes to be completed and from those whose homes have been sold through collective sales. If this is the case, this demand will be reversed in the next few years as their units will be completed.

Number of residential rents signed and vacant units up

According to a report released by Savills, total number of residential rental agreements in the first 10 months of 2012 has reached 42,139, a number just 2,923 leases lower from the record high of 45,062 in 2011. Since November - December period historically see an average of around 3,000 leasing deals for each month, the full year’s leasing volume is expected to hit around 48,000 transactions.

The number of condo rents in Singapore has reached 37,886 between January - October 2012 which is a little lower than the full year’s transactions of 40,222 in 2011. According to Savills, the total number of leases for condos and houses will record new highs by the end of the year.

But this does not necessarily mean that landlords in Singapore can increase already ultra-high rents readily. While the demand is increasing for rental units, possible due to government property sales cooling measures which prices out some people from sales market, supply is increasing faster with more homes completed over the past year, the rental market has seen a significant rise in vacant units in Singapore. Although an increase in rental agreements from 45,062 to 48,000 represents a sharp 6.6% increase in demand, the number of vacant units has increased by much sharper 32% from 12,740 to 16,877 units from Q1 2011 to Q2 2012. As of Q3 2012, the number of vacant condos is 14,198 units and vacant houses is 2,679 units.

And if you are planning to invest into property for rental yield, take a note that the flood of private property supply in Singapore is just beginning. According to URA data, 91,869 new homes will be released in Singapore in the next 5 years, and more than half of these units are already sold. So the growing supply of new residential property is a significant risk to investors who have bought their private properties for rental investment. If a very likely rental yield decrease coincides with a interest rate hike, the rental income - mortgage payment may easily turn to deeply negative cash flow.

Nevertheless, 2012 saw a 7% year-on-year increase for condo rents in Singapore. Based on URA data, Singapore rents for condos and apartments (excluding the executive condominiums) reached a new height of $3.75 per sq ft per month in October.

35,000 private flats will be completed in 2013 and 2014

If you are renting your accommodation in Singapore and tired of ridiculously high rental problems, there may be a relief in horizon. A huge supply of 35,000 private flats will be completed in 2013 and 2014. This will add a lot of rental units in the market where rents and prices were increasing non-stop since 2009.

The number of completed private flats is increasing every year since 2009. In 2010, 9,900 units were completed. In 2011, this number was 11,700 and in this year, 12,500 units will be completed.  Most of these units, almost 10 percent, will be completed in Bedok planning area which is followed by Geylang, Hougang, Newton and Novena. The final numbers may be as large as 40,000 since the good property sales of these days may bring many projects forward and result in early completion.

Currently, Singapore is the ninth most expensive city to rent property in the world, and third most expensive city in Asia. This is despite a moderate increase in the prices in 2011. Average rent for an unfurnished 4 room (3 bedroom) apartment in Singapore rose 3% in 2011 in Singapore dollar terms, one of the lowest in the region. In 2010, rents rose over 10%.

And even before the supply flow hit the shores, it is already a renters market in Singapore so bargain hard to lower the asking rental prices. According to Rent in Singapore web site, as of October 2012, it is pretty much a renters' market in Singapore. Rentals have been under pressure lately because of the recent worldwide economic downturn and a supply flow of new apartments coming online in 2012, 2013 and 2014.

If condo rents in Singapore is hurting your budget, you can choose to rent an HDB instead of a condo which is much cheaper and larger with the same price (See It makes more sense to rent HDB instead of Condominium).

[1] - Singapore among world’s most expensive cities to rent property
[2] - Frequently Asked Questions about renting a home in Singapore