Home, retail, office rental growth to ease

[mr funny]

Published March 25, 2008

Home, retail, office rental growth to ease

Housing rentals to rise 5-15% year-on-year in 2008: Knight Frank

By UMA SHANKARI


PRIVATE housing rents are expected to grow at a slower pace this year than last year, Knight Frank said in a report yesterday.

The property consultancy firm expects a year-on-year rise of 5-15 per cent in 2008 - after a massive 40 per cent year-on-year increase in 2007.

Knight Frank's estimates are based on the resistance of tenants and companies to even higher rents, and the limited availability of places at foreign schools for children of expatriates.

'Due to the fact that foreign schools are full and there are long waiting lists faced by children of foreign families who relocated here, housing demand from new foreign family tenants is projected to decrease,' Knight Frank said.

'On top of this, foreign tenants as well as corporate HR (departments) have readjusted housing allowances this year, which constricts rental demand according to their budgets.'

Despite this, a demand-supply imbalance could still result in rental rises until a supply of new units is felt significantly from 2009.

About 8,400 new private homes will be completed this year. But the number will expand dramatically in the three years from 2009 to 2011, with an estimated 16,000 to 17,000 units completed each year.

This could put downward pressure on rents, Knight Frank said.

The same holds true for the retail sector. Knight Frank predicts that landlords could face stronger resistance from retailers to rising rents in the later part of 2008 as more space comes on stream.

'Rents are forecast to maintain at their current level only until early 2008,' it said. 'Faced with a larger supply in the pipeline in the second half of 2008, island-wide prime retail rents are projected to appreciate by a relatively modest 5-10 per cent for entire 2008, compared to 22.1 per cent growth in 2007.'

Knight Frank also said growth in office rents and capital values in 2008 and 2009 will likely to be more moderate than in 2007. Office rents are forecast to rise 10-20 per cent year on year, while capital values are expected to increase 10-15 per cent year on year.

[Unregistered]

How come this thread got no people come to post?

In that case I will post something here lor ...

Otherwise some of the other threads got infested with news articles about subprime this, subprime that ...

Today I just bought a magazine called "Pulses" which has an article about property prices.

Some people claim "Salaries are on the rise but have not matched the percentage increases in property prices ... this effectively prices buyers out ..."

"Properties must be 5X annual salaries" but whose salary?

This article has the answer:

"Salary increases have never matched the percentage increases in property prices (or most other assets for that matter) over the long term in Singapore.

1975: Terrace house in West Coast ($100,000); school teacher's salary ($650 per month). One terrace house = 13 years' salary.

2007: Terrace house in West Coast ($1,280,000); school teacher's salary ($2,500 per month). One terrace house = 42 years' salary.

However, the very top-end wage earners and business owners have seen their pay cheques surge beyond the percentage increase of property prices. Interest rates have been low, thus favouring the borrower rather than the depositor. With present rental yield coupled with inflation, the real mortgage rates are actually negative.

[Unregistered]

How come this thread got no people come to post?

In that case I will post something here lor ...

Otherwise some of the other threads got infested with news articles about subprime this, subprime that ...

Today I just bought a magazine called "Pulses" which has an article about property prices.

Some people claim "Salaries are on the rise but have not matched the percentage increases in property prices ... this effectively prices buyers out ..."

"Properties must be 5X annual salaries" but whose salary?

This article has the answer:

"Salary increases have never matched the percentage increases in property prices (or most other assets for that matter) over the long term in Singapore.

1975: Terrace house in West Coast ($100,000); school teacher's salary ($650 per month). One terrace house = 13 years' salary.

2007: Terrace house in West Coast ($1,280,000); school teacher's salary ($2,500 per month). One terrace house = 42 years' salary.

However, the very top-end wage earners and business owners have seen their pay cheques surge beyond the percentage increase of property prices. Interest rates have been low, thus favouring the borrower rather than the depositor. With present rental yield coupled with inflation, the real mortgage rates are actually negative.

Sorry to say that the terrace houses' today are no longer targetting school teachers as buyers. Buyers are businessmen or high flying professionals who see their earning surge many times compared to 30 years' ago.

1975 : high earners/professionals (couple of ten thousands)
2008 : high earners/ profeesionals (few hundred thousands/millions).

[Unregistered]

Sorry to say that the terrace houses' today are no longer targetting school teachers as buyers. Buyers are businessmen or high flying professionals who see their earning surge many times compared to 30 years' ago.

1975 : high earners/professionals (couple of ten thousands)
2008 : high earners/ profeesionals (few hundred thousands/millions).

With the current cost of living and base on that calculation, teachers' annual wage should be 100K. We are not seeing this happening at all but the ministers are getting almost the same amount as their counterparts in the commercial sector. Cheers,we should ask the gov to pay the teachers more money.

[Unregistered]

With the current cost of living and base on that calculation, teachers' annual wage should be 100K. We are not seeing this happening at all but the ministers are getting almost the same amount as their counterparts in the commercial sector. Cheers,we should ask the gov to pay the teachers more money.

Sorry hor, there are many teachers but few ministers. One job is high demand high supply, the other is high demand low supply, so wage for teachers will not rise but wage for ministers will rise, otherwise they will leave and then nobody will be attracted to politics or can do a better job... so goes the reasoning.

[Unregistered]

Actually if you have the money, buying a Good Class Bungalow (GCB) is the best investment.

Unfortunately that's beyond my budget and most people's too.

There are only about 1000 Good Class Bungalows in Singapore.

However, the number of people earning more than a million-dollar annual salaries is rising like crazy.


..................................>$1 M p.a.
Year of Assessment 2002: 1422
Year of Assessment 2003: 1451
Year of Assessment 2004: 1481
Year of Assessment 2005: 1738
Year of Assessment 2006: 2121

The supply of GCBs is fixed (1000) while the number of people who can potentially afford them is increasing at a very high rate.

Not to forget that some very rich but retired people may not be listed as high taxpayers. These are the "old wealth" people who own the bungalows.

The mass market may be expected to do well this year and next, but I think the salaries of the buyers of mass market condos, e.g. teachers and engineers, are unlikely to rise very much.

It's the top end people who're going to see their income shoot up tremendously. Hence over the long term I feel the high-end landed and also luxury condo markets are very promising.

But what's the use of talking? They're out of reach anyway.

Haha ... can't believe that I myself also turn into a sour grape.

[Unregistered]

Actually if you have the money, buying a Good Class Bungalow (GCB) is the best investment.

Unfortunately that's beyond my budget and most people's too.

There are only about 1000 Good Class Bungalows in Singapore.

However, the number of people earning more than a million-dollar annual salaries is rising like crazy.


..................................>$1 M p.a.
Year of Assessment 2002: 1422
Year of Assessment 2003: 1451
Year of Assessment 2004: 1481
Year of Assessment 2005: 1738
Year of Assessment 2006: 2121

The supply of GCBs is fixed (1000) while the number of people who can potentially afford them is increasing at a very high rate.

Not to forget that some very rich but retired people may not be listed as high taxpayers. These are the "old wealth" people who own the bungalows.

The mass market may be expected to do well this year and next, but I think the salaries of the buyers of mass market condos, e.g. teachers and engineers, are unlikely to rise very much.

It's the top end people who're going to see their income shoot up tremendously. Hence over the long term I feel the high-end landed and also luxury condo markets are very promising.

But what's the use of talking? They're out of reach anyway.

Haha ... can't believe that I myself also turn into a sour grape.

Fren, I think you are more admire than sour. If you are sour, you will talk rubbish on GCB, say so expensive lah, who can afford to buy lah? Price sure crash in no time, the price of GCB is going to be not much difference from HDB.

Fren, at least you talk sense and with honesty. I too cannot afford a GCB but admire those successful bizman/professionals who can.

[Unregistered]

Fren, I think you are more admire than sour. If you are sour, you will talk rubbish on GCB, say so expensive lah, who can afford to buy lah? Price sure crash in no time, the price of GCB is going to be not much difference from HDB.

Fren, at least you talk sense and with honesty. I too cannot afford a GCB but admire those successful bizman/professionals who can.

Frens, there are 2 ways to realise your GCB.
One way is to get yourself a million $ salary income, which most of us can't.
The other one is to build your wealth thr investment, which most of the GCB owner done in the past.

Frens, if you are vested, then congrats you guys, you are one step nearer to the GCB.

[Unregistered]

Frens, there are 2 ways to realise your GCB.
One way is to get yourself a million $ salary income, which most of us can't.
The other one is to build your wealth thr investment, which most of the GCB owner done in the past.

Frens, if you are vested, then congrats you guys, you are one step nearer to the GCB.

Yes fren, working towards my goal. Hope to achieve before my retirement.,

[Unregistered]

my friend dad handed down an old bungalow which the family bought at 40,000 in 1965. He recently sold it his GCB in late 2006 for $11 million. Heard the purchaser sold it half a year later at $19 million in 2007. The moral of the story is that property, be it HDB, 99LH, FH over long period of time goes up in value....more so now with crazy cost of constuction. Heard many school & CC projects now are going around to raise fund because their original cost is now not achievable, up 30-40%.

[Unregistered]

Fren, I think you are more admire than sour. If you are sour, you will talk rubbish on GCB, say so expensive lah, who can afford to buy lah? Price sure crash in no time, the price of GCB is going to be not much difference from HDB.

Fren, at least you talk sense and with honesty. I too cannot afford a GCB but admire those successful bizman/professionals who can.

Frens, there are 2 ways to realise your GCB.
One way is to get yourself a million $ salary income, which most of us can't.
The other one is to build your wealth thr investment, which most of the GCB owner done in the past.

Frens, if you are vested, then congrats you guys, you are one step nearer to the GCB.

Haha ... I always like to collect photos of GCBs. They're very nice. Even though I can't afford them, but at least I can collect photos of them.

Last time before the internet, I used to cut and paste from magazines. Nowadays just need to use Google to search the image. I especially like those night shots where they have the whole house lighted up and the swimming pool dazzling with light ... very romantic and impressive.

Even though I may be vested, asset prices tend to move up in tandem so even if my investments move up, the GCB prices will move up even more. So it will forever be out of reach.

Some people say the rich gets richer while the poor gets poorer. This widening wealth gap is also happening at the top, where the ultra-wealthy gets richer at a faster rate than the ordinarily-wealthy. The gap is widening at all levels.

my friend dad handed down an old bungalow which the family bought at 40,000 in 1965. He recently sold it his GCB in late 2006 for $11 million. Heard the purchaser sold it half a year later at $19 million in 2007.

GCB prices have already gone up very much, like the friend of the poster above. Within half a year, it has gone up by $8 million.

The friend must be quite sad, he kept his family property snice 1965 till 2006 (over a period of 41 years) to see the property reach a price of $11 million and then within half-a-year after he sold it, it went up by $8 million.

The lesson is that properties should only be bought and not sold, because you never know when it will suddenly shoot up. If you are not in dire need of money, there is no need to sell them at all.

My parents sold two investment properties during the 1980's recession. One sold for around $200,000 which today is worth $1,000,000. Another was sold for $300,000 which went up to $3,000,000 (10 times! En Bloc property). What a waste!

Due to selling away properties, my family is poorer by $3.5 million. That alone could have gotten us closer to a GCB.