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Thread: New home leases shrink 50% in Q1

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    Default New home leases shrink 50% in Q1

    Published May 17, 2007

    New home leases shrink 50% in Q1

    This may signal expats, PRs opting to buy instead of rent: Savills

    By ARTHUR SIM


    THE number of new residential leases have fallen by 50 per cent in the first quarter of 2007 to 4,493, compared to Q1 2006, posing a bit of a conundrum in an otherwise buoyant property market.

    Data from Savills Singapore also reveal that vacancies have fallen from an average of 6.1 per cent in Q4 2006 to about 5.9 per cent in February, suggesting that underlying demand in the leasing market is still healthy.

    Nevertheless, Savills director Simon Hill thinks that the drop in the number of leases could signal the rise of several new trends in the market, the most compelling of which is that permanent residents and expats here have decided that rents have risen too high and are now opting to buy instead.

    Mr Hill, who heads the residential leasing division at Savills, believes that the number who have opted to buy instead of rent has increased by as much as 20 per cent quarter-on-quarter. 'The Australians and the English are especially keen,' he added.

    Other factors - like the contraction of available units due to collective sales and more simply, the extension of leases - could also contribute to the drop in new leases. However, figures showing that the number of foreigners and PRs buying property has increased seems to support the push factor of spiralling rents.

    For Q1 2007, the official rental index (non-landed) increased by 8 per cent quarter-on-quarter and 23 per cent year-on-year, while Savills notes that for the first three months of the year, foreigners and expats bought 1,550 units or 27.7 per cent of the 5,592 units transacted compared to 23 per cent or 4,534 units for the whole of 2006.

    The increased interest from foreigners and PRs would bode well for the market if not for the repercussions already being felt.

    Another trend that Mr Hill has noted is that MNCs are begining to cut back on the number of foreign postings here. 'So far, I have encountered three multinational corporations that have decided to put on hold the decision to move more people to Singapore. One of the reasons is that housing allowances have had to be increased,' he said.

    He says there have been instances where housing allowances have had to be doubled.

    Expats have traditionally favoured Districts 9,10 and 11, but Mr Hill says these districts are 'slowly pricing themselves out of the expat market'. The firm is now advising people to consider other districts.

    How this trend plays out will certainly have an impact on the market here.

    That property prices are still comparatively cheap is in Singapore's favour. Data compiled by Savills reveals that average prices for high-end homes are still the highest in London at $8,900 psf, followed by Monaco ($5,000 psf), New York ($4,500 psf), Tokyo ($3,400 psf) and Hong Kong ($3,100 psf). And although prices for super-luxury homes have topped $4,000 psf here, the average price for high-end property is still $1,762 says Savills. By comparison, super-luxury prices in London are said to have crossed $14,000 psf.

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    Default Re: New home leases shrink 50% in Q1

    Quote Originally Posted by mr funny
    Published May 17, 2007

    New home leases shrink 50% in Q1

    This may signal expats, PRs opting to buy instead of rent: Savills

    By ARTHUR SIM


    THE number of new residential leases have fallen by 50 per cent in the first quarter of 2007 to 4,493, compared to Q1 2006, posing a bit of a conundrum in an otherwise buoyant property market.

    Data from Savills Singapore also reveal that vacancies have fallen from an average of 6.1 per cent in Q4 2006 to about 5.9 per cent in February, suggesting that underlying demand in the leasing market is still healthy.

    Nevertheless, Savills director Simon Hill thinks that the drop in the number of leases could signal the rise of several new trends in the market, the most compelling of which is that permanent residents and expats here have decided that rents have risen too high and are now opting to buy instead.

    Mr Hill, who heads the residential leasing division at Savills, believes that the number who have opted to buy instead of rent has increased by as much as 20 per cent quarter-on-quarter. 'The Australians and the English are especially keen,' he added.

    Other factors - like the contraction of available units due to collective sales and more simply, the extension of leases - could also contribute to the drop in new leases. However, figures showing that the number of foreigners and PRs buying property has increased seems to support the push factor of spiralling rents.

    For Q1 2007, the official rental index (non-landed) increased by 8 per cent quarter-on-quarter and 23 per cent year-on-year, while Savills notes that for the first three months of the year, foreigners and expats bought 1,550 units or 27.7 per cent of the 5,592 units transacted compared to 23 per cent or 4,534 units for the whole of 2006.

    The increased interest from foreigners and PRs would bode well for the market if not for the repercussions already being felt.

    Another trend that Mr Hill has noted is that MNCs are begining to cut back on the number of foreign postings here. 'So far, I have encountered three multinational corporations that have decided to put on hold the decision to move more people to Singapore. One of the reasons is that housing allowances have had to be increased,' he said.

    He says there have been instances where housing allowances have had to be doubled.

    Expats have traditionally favoured Districts 9,10 and 11, but Mr Hill says these districts are 'slowly pricing themselves out of the expat market'. The firm is now advising people to consider other districts.

    How this trend plays out will certainly have an impact on the market here.

    That property prices are still comparatively cheap is in Singapore's favour. Data compiled by Savills reveals that average prices for high-end homes are still the highest in London at $8,900 psf, followed by Monaco ($5,000 psf), New York ($4,500 psf), Tokyo ($3,400 psf) and Hong Kong ($3,100 psf). And although prices for super-luxury homes have topped $4,000 psf here, the average price for high-end property is still $1,762 says Savills. By comparison, super-luxury prices in London are said to have crossed $14,000 psf.
    Many of my expat colleagues indeed bought their own unit recently.

    There is a danger rental will collapse in times to come as few expat are renting. I guess this is some sort of normal up and down cycle for any marketable entity until it reaches a new supply and demand balance . The danger is if the condition of Singapore turns unfavourable to Expats, it may also put a lot pressure on the health of property market as the expats will all rush to sell their properties before they leave.

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    Default Re: New home leases shrink 50% in Q1

    Quote Originally Posted by Unregistered
    Many of my expat colleagues indeed bought their own unit recently.

    There is a danger rental will collapse in times to come as few expat are renting. I guess this is some sort of normal up and down cycle for any marketable entity until it reaches a new supply and demand balance . The danger is if the condition of Singapore turns unfavourable to Expats, it may also put a lot pressure on the health of property market as the expats will all rush to sell their properties before they leave.

    Let them go lor.
    Other expats will take their place.

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    Cool Re: New home leases shrink 50% in Q1

    Quote Originally Posted by Unregistered
    Many of my expat colleagues indeed bought their own unit recently.

    There is a danger rental will collapse in times to come as few expat are renting. I guess this is some sort of normal up and down cycle for any marketable entity until it reaches a new supply and demand balance . The danger is if the condition of Singapore turns unfavourable to Expats, it may also put a lot pressure on the health of property market as the expats will all rush to sell their properties before they leave.
    Actually, this is one concern that i am worried about. When all is so bullish, people start to forget how bad it can be. In fact i respect MGM for his insight into my position in this property game. What comes up, must come down. All the more i have to keep in touch with expats to know their ground level. When the great exodus goes out of Singapore, i will cash out immedietly. Although i may be bullish, but i have to be negative as well.

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    Default Re: New home leases shrink 50% in Q1

    I am an expat. Have decided not to buy, but to leave. Too expensive! Govt has allowed prices to rise too quickly.. so buying is not sensible as prices are out of line with fundamentals. Better deals in more stable markets elsewhere.

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    Default Re: New home leases shrink 50% in Q1

    Leave leave.for every expat who leave 3 waiting to come in.

  7. #7
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    Default Re: New home leases shrink 50% in Q1

    Quote Originally Posted by Unregistered
    I am an expat. Have decided not to buy, but to leave. Too expensive! Govt has allowed prices to rise too quickly.. so buying is not sensible as prices are out of line with fundamentals. Better deals in more stable markets elsewhere.

    Leave lor.
    Yesterday one American, just relocated here, called me to enquire about network connectivity between Singapore and US for his .....
    This AsiaPac chief is settinp up shops in AsiaPac.

    It is good that you go so that others with higher profile can come.

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