Kevin Tan
22-10-15, 09:39
http://www.theedgeproperty.com.sg/content/mass-market-shoebox-rents-dip-35-3q2015
Mass-market shoebox rents dip 3.5% in 3Q2015
By Lin Zhiqin / The Edge Property | October 17, 2015 10:00 AM MYT
Preliminary estimates indicate that rents for shoebox units dipped 1.9% quarter-on-quarter in 3Q2015. Mass-market shoebox units led the decline as monthly rents fell 3.5%or $73 from $2,089 in 2Q2015, to $2,016 in 3Q2015. Ona brighter note, shoebox rents in the city fringe stayed unchanged from the last quarter at $2,380 per month. In the high-end segment, monthly shoebox rents fell 2.1% or $59 from$2,815 in 2Q2015, to $2,756 in 3Q2015 (see Table 1).
Table 1: Mass-market shoebox units lead rental decline
Source: URA, The Edge Property
Shoebox units in the mass market continue to face strong competition from HDB flats for tenants. For the same rents, tenants could get a three-room HDB unit with two bedrooms and share their rental expenses with a flatmate. Based on HDB subletting contracts, the island-wide monthly rents for HDB flats averaged $1,958 for three-room units and $2,297 for four room ones in 3Q2015.
On the other hand, shoebox units in the high-end and city fringe segments are more attractive, particularly to tenants who work in the CBD as they can save on commuting costs and time. At the same time, they offer value alternatives to bigger units.
The analysis was based on a basket of properties tracked by The Edge Property. The figures differ slightly from those in our previous article owing to changes in the basket. Shoebox units are defined as private non-landed homes that are up to550 sq ft in size in this article. “High-end segment” refers to the Core Central Region (CCR), while the city fringe and mass market refer to the Rest of Central Region (RCR) and Outside Central Region (OCR), respectively.
Between 3Q2013’s peak and today, shoebox rents have fallen around 18% or $500 from $2,905 to $2,371 per month. Segment- wise, monthly rents for shoebox units have fallen20% in the high-end submarket, 14% in the city fringe and 22% in the mass market.
In comparison, rents for non-shoebox units have been more resilient. The URA rental index for private non-landed homes fell 7.2% in the high-end segment, 3.1% in the city fringe and 6.7% in the mass market between the last peak and 2Q2015.
The soft rental market continues to dent the profitability of shoebox transactions. Based on URA caveat data, 8% of residential shoebox units (15 of 185 transactions) were sold at a loss in the secondary market. In comparison, only 3% (eight of 307 transactions) of shoebox units were sold at a loss in 2013 and 7% (14 of 215 transactions) in 2014 (see chart).
http://www.theedgeproperty.com.sg/content/mass-market-shoebox-rents-dip-35-3q2015
Mass-market shoebox rents dip 3.5% in 3Q2015
By Lin Zhiqin / The Edge Property | October 17, 2015 10:00 AM MYT
Preliminary estimates indicate that rents for shoebox units dipped 1.9% quarter-on-quarter in 3Q2015. Mass-market shoebox units led the decline as monthly rents fell 3.5%or $73 from $2,089 in 2Q2015, to $2,016 in 3Q2015. Ona brighter note, shoebox rents in the city fringe stayed unchanged from the last quarter at $2,380 per month. In the high-end segment, monthly shoebox rents fell 2.1% or $59 from$2,815 in 2Q2015, to $2,756 in 3Q2015 (see Table 1).
Table 1: Mass-market shoebox units lead rental decline
Source: URA, The Edge Property
Shoebox units in the mass market continue to face strong competition from HDB flats for tenants. For the same rents, tenants could get a three-room HDB unit with two bedrooms and share their rental expenses with a flatmate. Based on HDB subletting contracts, the island-wide monthly rents for HDB flats averaged $1,958 for three-room units and $2,297 for four room ones in 3Q2015.
On the other hand, shoebox units in the high-end and city fringe segments are more attractive, particularly to tenants who work in the CBD as they can save on commuting costs and time. At the same time, they offer value alternatives to bigger units.
The analysis was based on a basket of properties tracked by The Edge Property. The figures differ slightly from those in our previous article owing to changes in the basket. Shoebox units are defined as private non-landed homes that are up to550 sq ft in size in this article. “High-end segment” refers to the Core Central Region (CCR), while the city fringe and mass market refer to the Rest of Central Region (RCR) and Outside Central Region (OCR), respectively.
Between 3Q2013’s peak and today, shoebox rents have fallen around 18% or $500 from $2,905 to $2,371 per month. Segment- wise, monthly rents for shoebox units have fallen20% in the high-end submarket, 14% in the city fringe and 22% in the mass market.
In comparison, rents for non-shoebox units have been more resilient. The URA rental index for private non-landed homes fell 7.2% in the high-end segment, 3.1% in the city fringe and 6.7% in the mass market between the last peak and 2Q2015.
The soft rental market continues to dent the profitability of shoebox transactions. Based on URA caveat data, 8% of residential shoebox units (15 of 185 transactions) were sold at a loss in the secondary market. In comparison, only 3% (eight of 307 transactions) of shoebox units were sold at a loss in 2013 and 7% (14 of 215 transactions) in 2014 (see chart).
http://www.theedgeproperty.com.sg/content/mass-market-shoebox-rents-dip-35-3q2015