More expats buying homes as rents jump 35% in first half: analysts
By Jeana Wong, Channel NewsAsia | Posted: 09 July 2007 2126 hrs
SINGAPORE : Rising rentals in Singapore have led to more expatriates buying properties here.
Property market watchers say a growing number of foreign executives are choosing to trade off living in upscale locations for bigger properties outside the city area and home ownership.
According to some calculations, average rents in Singapore went up by 35 percent in the first six months of this year over the same period last year.
This is causing expatriates to move to cheaper districts.
And anecdotal evidence is suggesting that of late, more are thinking of buying their flats.
Nicholas Mak, Consultancy and Research Director, Knight Frank, said: "Another group of expatriate tenants are actually considering buying properties - either buying the apartments they are renting, ... or considering asking for their rental package - their housing accommodation package - to be paid as a lump sum so that they can use that to purchase a home, maybe even a landed property."
Flats in prime districts now rent for an average of S$3.26 per square foot a month, while those just outside of the central areas are letting for $2.30 per square foot a month.
The districts of 9, 10 and 11 may be rental hotspots for most higher-end expats.
But analysts say those seeking to buy tend to go for the upper-mid level properties between 15 to 20 years old in outlying areas like Clementi, Toh Tuck and even Loyang and Pasir Ris.
Such expats, some of whom are permanent residents, typically have a budget of just over a million dollars.
Donald Han, Managing Director, Cushman and Wakefield, said: "We've actually started to see out of 10 expatriates that we serve, at least one will be looking into either leasing or potentially even buying. And quite a fair bit of those will ultimately decide to purchase rather than lease. Typically they'll look into the fringe of Districts 9, 10, and 11.
"They will look into properties which are not the top end, more into the upper-mid level, potentially within the S$800 to as much as S$1,200 per square foot. And the units could be of the size of one- to two-bedroom kind of apartments. For landed property, typically perhaps a District 21, landed terrace houses which might go in the region of a million to S$1.2 million."
Property market watchers say the upward pressure on rental prices is unlikely to let up over the next 12 months.
Mr Mak said: "Private home rentals are still going to face a lot of upward pressure for the rest of this year and probably for the first half of next year. This year alone, we could easily see average rentals go up by anywhere from 15 percent to even as much as 25 percent."
Mr Han said: "Rental will continue to rise by virtue that it's really a landlord's market. I suspect rental in the next 12 months will probably continue to rise between the range of about 20 percent to 25 percent from current levels."
This comes as demand continues to grow and collective sales aggravate the already limited supply available. - CNA/ch
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