JL LaSalle says Singapore's prime property market to ease further

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JL LaSalle says Singapore's prime property market to ease further

By Ng Baoying, Channel NewsAsia | Posted: 17 July 2008 1817 hrs


SINGAPORE: Rents in Singapore's prime residential sector are expected to ease further. Consultancy firm Jones Lang LaSalle has projected a 4.5 per cent contraction for the whole year. The sector has already weakened by two per cent year to date.

In its mid-year review on the Singapore property market, Jones Lang LaSalle also noted an easing in the resale prices of luxury projects in the prime districts.

However, it said that mass market homes saw healthy growth of some three per cent.

High rentals are forcing expatriates on lower housing budgets to move out of the prime market in Singapore and this is behind softening rents this year. This is expected to persist into 2009, when more housing units will likely enter the market.

An anticipated 15,000 units are expected to be completed by the end of 2009, compared to an average take up of 6,800 units per annum.

According to Jones Lang LaSalle, what may help prop up rentals is demand. It noted that companies in Singapore are still expanding, going by the take-up in office space.

Christopher Fossick, Managing Director, Singapore & Southeast Asia, Jones Lang LaSelle, said: "There is still an influx of people coming here to work and there is a strong expatriate demand in all business sectors."

Meanwhile, in the resale market, the average prices of units in the prime districts eased by some 4.9 per cent in the first half of this year.

However, this may change. Collective sales have been a key source of land for new projects in the prime areas and with these drying up, home prices may be pushed upwards.

Mr Fossick continued: "There's been almost no residential collective sales this year. Volume has gone down 97 per cent by our records in the first half versus the first half in 2007. In 12 to 24 months’ time, we're going to see that impacting the market. There's also far less supply from luxury collective sales sources."

Over in the mass market, prices have been holding up, climbing by some three per cent in the first half of 2008 due to demand from dislodged collective sale owners and those upgrading from government flats. - CNA/vm

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Published July 18, 2008

Rents, prices in central, prime areas may drop

JLL predicts up to 4.5% dip in typical prime district rents

By EMILYN YAP


RENTS and resale prices of housing in the central and prime districts could be hit this year and next depending on the crunch in the US market, says Jones Lang LaSalle (JLL).

In the worst case scenario, the real estate consultancy firm projects a 3.5 to 4.5 per cent drop in rents in the typical prime districts by year-end. 'Compared to recent rental rises, this remains a relatively small decline,' said JLL's managing director in South-east Asia and Singapore, Chris Fossick. The central districts could experience a bigger 5 to 7 per cent drop in rents in 2009.

The anticipated completion of some 15,000 units between 2008 and 2009 is likely to cause rents to ease, as new islandwide supply is likely to surpass the average 10-year take up of 6,600-6,800 units, JLL said in a statement yesterday. Most completed supply could appear in the central districts.

Average resale prices in the central districts could ease about one per cent by 2009, while prices in the luxury prime districts could dive 11-13 per cent.

Mr Fossick referred to the forecasts as 'more of a worst-case scenario' should the US market not pick up soon. He said that sentiment will improve once US housing shows signs of recovery. Singapore's fundamentals are attractive to investors and demand will return when uncertainty clears, he added.

Investors might then realise that 'there is less supply now than we thought there was' - and prices may rise again.

Taking a medium to longer-term view, Mr Fossick said: 'We are seeing a dramatic fall in potential future supply in Singapore due to a stall in collective sales.'

JLL said that there were only two transactions worth $55.3 million in the first half of this year, compared with 51 deals worth $9.33 billion in the same period last year.

Mr Fossick said that there is also less supply from the confirmed list of the Government Land Sales Programme for the second half of the year.

Prime districts are already seeing slightly weaker rents as expatriates with lower housing budgets move to non-prime areas. JLL data showed that in the first half of the year, luxury prime rents fell one per cent and typical prime rents dropped 2 per cent.

Properties in the central districts in turn became more popular for leasing. Average rents there rose 11 per cent and surpassed those of typical prime properties for the first time in H1 this year.

JLL data also showed average resale prices softening in some areas. Luxury prime property prices eased 4.9 per cent to $2,595 per square foot (psf) in the first half of the year, while central district prices eased 0.5 per cent to $1,020 psf.

The shift of rental demand from the prime to central districts has sustained investor interest in central district property, according to JLL.

The mass market stood out with 3 per cent growth in resale prices to around $690 psf in H1, and JLL projected that prices could stay at this level in 2009.

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July 18, 2008

Prime residential rents could fall 4.5% by year end

By Nicholas Fang


RESIDENTIAL rents in Singapore's prime districts could drop by 4.5 per cent by year end, amid fears of a longer-than-expected downturn in the United States.

Property consultant Jones Lang LaSalle (JLL) said the high rentals seen in the Republic's prime districts last year are now facing downward pressure.

Prime properties are typically located in districts nine to 11 with units ranging in size from 500 to 2,000 sq ft.

JLL South-east Asia and Singapore managing director Chris Fossick said in a press conference yesterday: 'Expatriates with lower housing budgets are moving out to the non-prime market, causing typical prime rentals to ease marginally in the first half of this year.'

According to JLL, luxury prime property rentals softened by 1 per cent in the year-to-date while typical prime rents weakened by 2 per cent.

Said JLL: 'With the US economy facing the potential of a longer downturn than expected due to the sub-prime woes, credit crunch and rising inflation, market sentiments continue to weaken in Singapore.

'The level of residential collective sales has dropped to only two transactions worth $55.3 million in the first half of the year compared with51 transactions worth some $9.33 billion over the same period last year.'

JLL forecasts that average resale prices in the central district are expected to ease about 1 per cent year-on-year by next year while mass-market resale prices will most likely maintain current levels.

Meanwhile, prices in the luxury prime market are expected to contract the most, falling some 11 to 13 per cent year-on-year next year.

However, Mr Fossick believes that once the US housing crisis passes, a recovery in this region will be swift given the sentiment-driven nature of the industry.

'The uncertainty in the US is unlikely to clear up in the next six months, but if things begin to look up after that, we could see a rapid turnaround here as soon as early next year.'