Suburban areas lead the way in rental growth

March 10, 2007

Suburban areas lead the way in rental growth

They have surged more than 20%, compared with 17.4% islandwide

By Fiona Chan

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IN DEMAND: Suburban rents are being boosted by newly completed developments, such as Hillview Regency (above) in Bukit Batok and Blue Horizon (next) in West Coast Crescent.
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LANDLORDS of suburban homes are finally getting a taste of the rising private property market.

Rents of homes in far-flung areas such as Bukit Batok and Pasir Ris have shot up over the past year, rising faster than prime and islandwide rents.

Since January last year, average rents in the western part of Singapore, such as in Bukit Batok, have gone up 27.8 per cent, according to an analysis by consultancy Knight Frank.

Average rents in the eastern part, including in Pasir Ris, have risen 23.2 per cent.

Across the country, average rentals increased by a smaller 17.4 per cent in the same period.

Knight Frank said the jump in suburban rents is partly due to higher demand as tenants are priced out of the prime areas.

Prime rents have spiked over the past two years, largely because of the huge number of collective sales in the central districts, said Mr Nicholas Mak, Knight Frank's director of research and consultancy.

Residents of estates that have been sold en bloc are scrambling to find replacement homes, pushing up demand for rental units.

At the same time, supply of these units is decreasing as more estates are torn down. Several more developments are trying to go en bloc, which means that their owners are not keen to sign long leases.

'In the past it was a tenant's market, rents everywhere were low and tenants were spoilt for choice,' said Knight Frank's Mr Mak.

'Now, prime rents are rising but the housing budgets of tenants have not kept pace, which means that they need to look outside the central areas.'

He added that suburban rents are being boosted by newly completed developments, such as Hillview Regency in Bukit Batok and Blue Horizon in West Coast Crescent, which are more coveted by tenants.

Expatriates working in the aerospace industry and at Changi Business Park also look for nearby homes in the eastern part of Singapore, while others working in industrial areas are drawn more to the western half.

But Mr Mak also pointed out that suburban rents have grown faster than average partly because they started from a lower base.

And despite the quicker pace of growth, rents in these areas are still well below those in the central districts.

Average monthly rents for a three-bedroom unit in the northern and eastern areas are between $3,000 and $4,000, according to Knight Frank's calculations.

They range from $2,000 to $3,000 in the north-east and $2,500 to $3,500 in the west. In contrast, prime districts are commanding rents of $6,000 to $8,000.

But with more projects being sold en bloc, suburban rents might rise further.

Property agents say rents at individual condominiums have already risen dramatically in recent months.

At the 99-year leasehold Maysprings in Bukit Panjang, the asking rental of a three-bedroom unit is now $1,400 per month, up from $1,000 just last year. Similarly, a 3+1 bedroom apartment at Seletaris in Sembawang is now going for $2,500 per month on average, compared to less than $2,200 before Chinese New Year.

'Now it's very hard to find a three-bedroom unit, fully furnished and near an MRT station, for below $2,300 a month,' one agent told The Straits Times.

Rising rentals bode well for the suburban condominium market. They may begin to boost buyers' interest in the suburban areas, where home prices are still mostly flat, said Mr Mak.

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TIGHT MARKET

'Now it's very hard to find a three-bedroom unit, fully furnished and near an MRT station, for below $2,300 a month.'
A PROPERY AGENT, on the rental market

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