Rents expected to fall, especially in prime districts and East Coast. Fiona Chan reports.
The Straits Times July 27, 2008
Next year is likely to be a bad one for landlords.
A bumper crop of newly completed homes is scheduled to flood the market, making more apartments available for rent and pushing down rents, which saw record rises last year.
And with lower rents, private home prices - which industry observers say have reached their peak - may drop further, especially those in the prime districts.
A massive 13,399 new private homes will be ready for occupation next year. This is double the average in recent years and the most in a single year, according to property consultancy CB Richard Ellis (CBRE).
Official supply numbers show 10,500 completions next year and 11,800 the year after, but CBRE’s analysis, based on construction progress and delays, reveals more completions next year.
It expects this new supply to depress rents by 5 to 10 per cent on average next year, coming on top of a global economic slowdown that might lead firms to hire fewer expatriates, the main source of tenants.
In the prime areas, rents could slide up to 15 per cent next year, on top of a decline that has already begun this year, predicted CBRE.
Popular rental areas such as the East Coast and Orchard will be among the worst hit as keen demand for homes there in recent years led developers to build aggressively.
An ‘alarming’ 3,341 new homes will be completed in the East Coast next year, double the number this year, CBRE said. Major projects in the area, which covers Katong and Marine Parade to Bedok and Changi, include the 562-unit One Amber and the 556-unit Casa Merah.
In the prime districts 9, 10 and 11, some 4,240 homes will be ready in areas such as Orchard, Holland, River Valley, Tanglin and Newton. RiverGate, with 545 units, is the biggest condominium scheduled to open its doors.
Suburban areas will also see a large jump in finished homes next year. In the north and north-west, for example, there will be 10 times more than this year.
But this is unlikely to result in a glut or lower rents as most suburban home buyers intend to occupy their units.
Property experts warn that many major prime projects to be ready this year and next are those that had attracted investors rather than owner-occupiers, which means their units will add to the rental supply.
‘Some big condos in the downtown areas have a higher proportion of investors,’ said Mr Colin Tan of property firm Chesterton International. These include the 1,111-unit Sail @ Marina Bay, which will be fully completed by the end of this year, and the 312-unit Clift in McCallum Road, expected next year.
‘We don’t even have to wait for the 14,000 homes next year; rents are already moderating and should come down in the third quarter,’ he said, adding that landlords are lowering their asking rentals.
He cited the case of The Sea View in Amber Road, whose 546 units were completed this year. ‘I asked someone there, how are the rents? He said: ‘I’m not sure really, there’s no demand’.’
This will be welcome news for renters, who have had to face ever-increasing rents over the last two years.
Rents have shot up 60 per cent on average since 2006 and even doubled in some places, thanks to an influx of expats and a shortage of rental homes.
For example, in Cuscaden Residences in the Tanglin area, a typical 1,485 sq ft unit could fetch $9,200 in monthly rents last year, from about $6,500 in 2005. This year, it has fallen to $8,100, according to recent reports. Next year, it could fall by another 10 per cent to $7,300, if CBRE’s predictions come true.
Entrepreneur Sebastien Dechamps, 29, who came here from France three years ago and started a website for expatriates, said high rents have seen more expatriates moving away from the city to places in the north and the east.
‘The fall in rental prices is definitely good news. It might encourage expats to move to the city, which is great because they can put more vibrancy back into the city and into its nightlife,’ he said.
A fall in rentals generally leads to a fall in home prices for two reasons: landlords, less able to service their mortgages, are willing to let go of their units more cheaply, while would-be investors will only pay as much as a home can fetch in rents.
The supply situation is not likely to improve beyond 2010: The latest official data shows that apart from the 21,000 or so homes to be completed over the next two years, there are another 20,000 homes scheduled to be built in 2011.
But Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, is still optimistic.
He expects higher than average housing demand during ‘the next few years of growth’, and believes that after accounting for demolitions of collective sale estates, the ‘net supply should be balanced by demand’.
Up to 75,000 new jobs could help to prop up market
Ku Swee Yong and Jane Kwa Thursday, July 17, 2008
HOMES for the masses have always been the backbone of Singapore’s residential market. And, with the two integrated resorts (IRs) expected to employ some 75,000 people, demand for such housing is likely to go up.
Both IRs are expected to draw a significant influx of “foreign talent”, simply because Singapore does not have enough people with the right skills for the various jobs that will be created.
When the IRs were first announced in 2005, the Government said that the IRs were expected to bring in about $5 billion of total investment and create 35,000 new jobs. Today, the impact is likely to be much larger, after the consortiums behind Marina Bay Sands and Genting Resorts World increased their investments to over $6 billion each.
Up to 75,000 new jobs are expected to be created, of which 30,000 will be from Marina Bay Sands and 45,000 from Genting Resorts World. This figure is more than half of the 140,000 people currently employed in the industry.
Over the past 12 to 18 months, the labour market saw record employment creation on the back of strong economic growth. With the unemployment standing at a low of 2 per cent (54,400 people), the need to attract foreign talent with the right set of skills has become a priority.
As few Singaporeans are trained in this area, it is likely that many of the vacancies would have to be filled by foreigners. Assuming 30 per cent of the jobs (some 23,000 of them) are taken up by locals and the remaining 70 per cent (52,000 jobs) by foreigners, this would generate a substantial demand for housing, especially in the rental market, and to a certain extent, the primary and secondary sales market.
It is estimated that around 44,000 resort workers will most likely reside in the lower tier of the housing market. Hence, it is clear that most of the demand would enter both the HDB, as well as the lower end of the mass private residential housing rental market, as these are more affordable.
According to the 2005 General Household Survey, the average household size is expected to be 3.7 persons. Assuming that five foreigners share one house, the minimum requirement would translate to 8,800 home between 2009 and 2010. The entrance of these foreigners would definitely have a very positive effect in all layers of the housing market.
Although the Urban Redevelopment Authority’s first quarter figures show that there were 14,862 vacant private residential units available in the market, we at Savills Singapore believe that they could include units from condominiums that had been sold en bloc and old apartments in unliveable conditions.
Hence, the current available private units could be as few as 7,500 units.
Moreover, the mass segment will see a moderate supply of only 8,400 units to be completed between 2008 and 2010. This modest supply, coupled with the strong demand in the rental market, is likely to boost homebuyers’ as well as investors’ confidence in the residential mass-market.
More jobs will be created not just from the effects of IRs, but also other ongoing mega-projects from Exxon Mobil and the soon-to-be-completed shopping malls, like ION Orchard, Orchard Central and Somerset Central. This, together with the Government’s efforts to attract foreign investment, will ensure the continued influx of foreigners, which will, :in turn, help sustain rental demand, especially at lower tier of the housing market.
With so much potential, we believe that the demand for mass-market homes will remain strong in the coming months, barring any unforeseen circumstances that could rock the global economy.
Ku Swee Yong is director of marketing and business development at Savills Singapore.
Jane Kwa is a senior research andconsultancy analyst at Savills Singapore.
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Record 13,400 homes to be completed next year
Rents expected to fall, especially in prime districts and East Coast. Fiona Chan reports.
The Straits Times July 27, 2008
Next year is likely to be a bad one for landlords.
A bumper crop of newly completed homes is scheduled to flood the market, making more apartments available for rent and pushing down rents, which saw record rises last year.
And with lower rents, private home prices - which industry observers say have reached their peak - may drop further, especially those in the prime districts.
A massive 13,399 new private homes will be ready for occupation next year. This is double the average in recent years and the most in a single year, according to property consultancy CB Richard Ellis (CBRE).
Official supply numbers show 10,500 completions next year and 11,800 the year after, but CBRE’s analysis, based on construction progress and delays, reveals more completions next year.
It expects this new supply to depress rents by 5 to 10 per cent on average next year, coming on top of a global economic slowdown that might lead firms to hire fewer expatriates, the main source of tenants.
In the prime areas, rents could slide up to 15 per cent next year, on top of a decline that has already begun this year, predicted CBRE.
Popular rental areas such as the East Coast and Orchard will be among the worst hit as keen demand for homes there in recent years led developers to build aggressively.
An ‘alarming’ 3,341 new homes will be completed in the East Coast next year, double the number this year, CBRE said. Major projects in the area, which covers Katong and Marine Parade to Bedok and Changi, include the 562-unit One Amber and the 556-unit Casa Merah.
In the prime districts 9, 10 and 11, some 4,240 homes will be ready in areas such as Orchard, Holland, River Valley, Tanglin and Newton. RiverGate, with 545 units, is the biggest condominium scheduled to open its doors.
Suburban areas will also see a large jump in finished homes next year. In the north and north-west, for example, there will be 10 times more than this year.
But this is unlikely to result in a glut or lower rents as most suburban home buyers intend to occupy their units.
Property experts warn that many major prime projects to be ready this year and next are those that had attracted investors rather than owner-occupiers, which means their units will add to the rental supply.
‘Some big condos in the downtown areas have a higher proportion of investors,’ said Mr Colin Tan of property firm Chesterton International. These include the 1,111-unit Sail @ Marina Bay, which will be fully completed by the end of this year, and the 312-unit Clift in McCallum Road, expected next year.
‘We don’t even have to wait for the 14,000 homes next year; rents are already moderating and should come down in the third quarter,’ he said, adding that landlords are lowering their asking rentals.
He cited the case of The Sea View in Amber Road, whose 546 units were completed this year. ‘I asked someone there, how are the rents? He said: ‘I’m not sure really, there’s no demand’.’
This will be welcome news for renters, who have had to face ever-increasing rents over the last two years.
Rents have shot up 60 per cent on average since 2006 and even doubled in some places, thanks to an influx of expats and a shortage of rental homes.
For example, in Cuscaden Residences in the Tanglin area, a typical 1,485 sq ft unit could fetch $9,200 in monthly rents last year, from about $6,500 in 2005. This year, it has fallen to $8,100, according to recent reports. Next year, it could fall by another 10 per cent to $7,300, if CBRE’s predictions come true.
Entrepreneur Sebastien Dechamps, 29, who came here from France three years ago and started a website for expatriates, said high rents have seen more expatriates moving away from the city to places in the north and the east.
‘The fall in rental prices is definitely good news. It might encourage expats to move to the city, which is great because they can put more vibrancy back into the city and into its nightlife,’ he said.
A fall in rentals generally leads to a fall in home prices for two reasons: landlords, less able to service their mortgages, are willing to let go of their units more cheaply, while would-be investors will only pay as much as a home can fetch in rents.
The supply situation is not likely to improve beyond 2010: The latest official data shows that apart from the 21,000 or so homes to be completed over the next two years, there are another 20,000 homes scheduled to be built in 2011.
But Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, is still optimistic.
He expects higher than average housing demand during ‘the next few years of growth’, and believes that after accounting for demolitions of collective sale estates, the ‘net supply should be balanced by demand’.
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The IR effect on housing demand
Up to 75,000 new jobs could help to prop up market
Ku Swee Yong and Jane Kwa
Thursday, July 17, 2008
HOMES for the masses have always been the backbone of Singapore’s residential market. And, with the two integrated resorts (IRs) expected to employ some 75,000 people, demand for such housing is likely to go up.
Both IRs are expected to draw a significant influx of “foreign talent”, simply because Singapore does not have enough people with the right skills for the various jobs that will be created.
When the IRs were first announced in 2005, the Government said that the IRs were expected to bring in about $5 billion of total investment and create 35,000 new jobs. Today, the impact is likely to be much larger, after the consortiums behind Marina Bay Sands and Genting Resorts World increased their investments to over $6 billion each.
Up to 75,000 new jobs are expected to be created, of which 30,000 will be from Marina Bay Sands and 45,000 from Genting Resorts World. This figure is more than half of the 140,000 people currently employed in the industry.
Over the past 12 to 18 months, the labour market saw record employment creation on the back of strong economic growth. With the unemployment standing at a low of 2 per cent (54,400 people), the need to attract foreign talent with the right set of skills has become a priority.
As few Singaporeans are trained in this area, it is likely that many of the vacancies would have to be filled by foreigners. Assuming 30 per cent of the jobs (some 23,000 of them) are taken up by locals and the remaining 70 per cent (52,000 jobs) by foreigners, this would generate a substantial demand for housing, especially in the rental market, and to a certain extent, the primary and secondary sales market.
It is estimated that around 44,000 resort workers will most likely reside in the lower tier of the housing market. Hence, it is clear that most of the demand would enter both the HDB, as well as the lower end of the mass private residential housing rental market, as these are more affordable.
According to the 2005 General Household Survey, the average household size is expected to be 3.7 persons. Assuming that five foreigners share one house, the minimum requirement would translate to 8,800 home between 2009 and 2010. The entrance of these foreigners would definitely have a very positive effect in all layers of the housing market.
Although the Urban Redevelopment Authority’s first quarter figures show that there were 14,862 vacant private residential units available in the market, we at Savills Singapore believe that they could include units from condominiums that had been sold en bloc and old apartments in unliveable conditions.
Hence, the current available private units could be as few as 7,500 units.
Moreover, the mass segment will see a moderate supply of only 8,400 units to be completed between 2008 and 2010. This modest supply, coupled with the strong demand in the rental market, is likely to boost homebuyers’ as well as investors’ confidence in the residential mass-market.
More jobs will be created not just from the effects of IRs, but also other ongoing mega-projects from Exxon Mobil and the soon-to-be-completed shopping malls, like ION Orchard, Orchard Central and Somerset Central. This, together with the Government’s efforts to attract foreign investment, will ensure the continued influx of foreigners, which will, :in turn, help sustain rental demand, especially at lower tier of the housing market.
With so much potential, we believe that the demand for mass-market homes will remain strong in the coming months, barring any unforeseen circumstances that could rock the global economy.
Ku Swee Yong is director of marketing and business development at Savills Singapore.
Jane Kwa is a senior research andconsultancy analyst at Savills Singapore.
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