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Thread: Residential rents seen rising further

  1. #1
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    Default Residential rents seen rising further

    Published March 27, 2008

    Residential rents seen rising further

    En bloc sales and population increase caused by influx of foreigners will continue to fuel demand, writes LEONARD TAY


    RESIDENTIAL rents bottomed out in 2004, recovering until 2007 when they staged an extraordinary rise, surging by more than 40 per cent within the year. This was the highest rate of increase in Urban Redevelopment Authority's private residential rental index since the index started in 1990.

    And 2008 is likely to see continued strength in rentals, although growing at a more modest pace of 5-10 per cent.

    Rents rose a negligible 0.2 per cent in 2004, and then a stronger 3.1 per cent in 2005, according to the URA private residential rental index. But as the residential sector recovered strongly from 2006 onwards, rental values rose more steeply.

    The non-landed residential segment, which forms the bulk of the leasing market, chalked up rental growth of 15 per cent in 2006 before sky-rocketing 43.1 per cent in 2007.

    A key reason for the supernormal growth in rents was the population increase as a result of immigration. Singapore's total population rose from 4,401,400 in 2006 to 4,588,600 in 2007, an addition of 187,200, of which Singapore residents made up 57,200 while foreigners constituted 130,000. This is a 14.8 per cent rise year-on-year and is the largest increase in the number of foreigners seen in over seven years. The foreign population refers to professionals, workers, students and their family members. This is the first time the total has crossed the one-million mark. The increase in 2006 was 9.7 per cent.

    Main attractions

    The positive run in the economy, growth prospects for the country and an attractive living environment brought many here, leading to the surge in demand for housing accommodation. The foreigners chose Singapore because of the job opportunities here and its connectivity to other major cities in Asia. Generally, they formed the bulk of the tenant pool and the prime districts (Orchard, Holland and Bukit Timah areas) were their favourite locations. However, due to the recent escalating rents, more expatriates have opted to move out of the prime districts for cheaper accommodation elsewhere. Some have even gone ahead to buy their own homes instead of renting.

    The swelling demand was further fuelled by the number of residential projects that were sold on the collective sale market. A number of displaced home owners have rented in the interim while waiting for their new replacement homes to be completed.

    While rents have increased islandwide, some regions are ahead of the pack. Rents in the Core Central Region (districts 9, 10, 11, Downtown Core and Sentosa) lead the market with a median rent of $3.86 per sq ft per month, going by URA's median rent numbers at end-2007. This is followed by the Rest of Central Region with a median rent of $2.74 psf per month and the areas Outside of Central Region with a median rent of $2.01 psf per month.

    Using CBRE Research's basket of properties for the luxury, prime and island-wide segments of the leasing market, average rents have reached even higher levels. The average rent for luxury residences ended 2007 at $6.10 psf per month, having risen 36 per cent during the year. Properties in this luxury class include the top 10 to 15 completed condominiums located in the prestigious areas around Orchard Road.

    Average rents for prime residential properties were $4.50 psf per month, having increased by 55 per cent in 2007, while islandwide rents were $2.65 psf per month, after rising 33 per cent in the same period.

    As rentals at prime and popular locations become more expensive, both local and foreign residents have been moving further out; first to the city fringe and eventually along the east-west axis of the MRT lines to the suburban areas. A comparison of non-landed median rents from the URA's Realis system in December 2006 and December 2007 shows that the most significant increases have not been restricted to the central areas, but have been seen in the eastern and western parts of the island.

    It should be noted that although districts 9 and 10 remain the most popular among expatriates, these districts have a range of old and new residences, leading to a relatively lower median rent compared with those in district 4. The residential landscape in district 4 (Telok Blangah/Harbourfront) is generally more homogenous and comprises newer developments that can fetch a premium.

    Outlook for 2008

    The leasing market is expected to remain firm in 2008 and rents will continue to rise, albeit at a more moderate pace in line with the less aggressive growth projected for the economy. The same phenomenon experienced in 2007 will continue into 2008 as fringe and suburban areas become more sought after by occupiers who find the higher rents in the prime central areas prohibitive. The spillover from the central area would cause rents to rise in other parts of the island and lead to overall growth in the leasing market.

    At the same time, as Singapore continues to attract the well-heeled from around the world, rents for luxury and city living condominiums in the popular areas around Orchard Road and the CBD will continue to move upwards. Average residential rents are expected to increase by about 5-10 per cent this year.

    Leonard Tay is a director of CBRE Research

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    Default Re: Residential rents seen rising further


  3. #3
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    Default Re: Residential rents seen rising further

    Within a span of one hour we have so many ppl reporting correction for property and rosy outlook.
    It is schizophrenic here in this forum.

  4. #4
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    Talking Re: Residential rents seen rising further

    Quote Originally Posted by Fast and Furious
    Within a span of one hour we have so many ppl reporting correction for property and rosy outlook.
    It is schizophrenic here in this forum.
    This is the last attempt this year to promote rosy outlook for property . from next week onwards prices going to drop !!!!

  5. #5
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    Default Re: Residential rents seen rising further

    Quote Originally Posted by Unregistered
    This is the last attempt this year to promote rosy outlook for property . from next week onwards prices going to drop !!!!
    Record breaking land sale price this month in westcost,Yishun and Serangoon.Property price in Singapore will be up,up,Up.Cheong Ah ! Huat Ah$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

  6. #6
    Unregistered
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    Default Re: Residential rents seen rising further

    Quote Originally Posted by Unregistered
    Record breaking land sale price this month in westcost,Yishun and Serangoon.Property price in Singapore will be up,up,Up.Cheong Ah ! Huat Ah$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
    March 27, 2008

    Fund tops Serangoon site tender with $801m bid

    Located above MRT station, it will be used for a mall and new bus interchange

    By Joyce Teo, Property Correspondent

    Huat Ah $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$Cheong Ah$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

  7. #7
    typical singapore student
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    Default Re: Residential rents seen rising further

    Quote Originally Posted by Fast and Furious
    Within a span of one hour we have so many ppl reporting correction for property and rosy outlook.
    It is schizophrenic here in this forum.

    That's what makes this forum so special. It has no agenda at all and welcomes all points of view.

    Would you rather be spoonfed all good news? Or would you rather use your own brain to justify your thoughts and actions?

  8. #8
    Unregistered
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    Default Re: Residential rents seen rising further

    Quote Originally Posted by typical singapore student
    That's what makes this forum so special. It has no agenda at all and welcomes all points of view.

    Would you rather be spoonfed all good news? Or would you rather use your own brain to justify your thoughts and actions?
    Kwek leng beng used to spooned people with good news what the so called " 10yrs life cycle". Now where is he??? quiet like an owl. LOL

  9. #9
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    Default Re: Residential rents seen rising further

    Quote Originally Posted by typical singapore student
    That's what makes this forum so special. It has no agenda at all and welcomes all points of view.

    Would you rather be spoonfed all good news? Or would you rather use your own brain to justify your thoughts and actions?
    SINGAPORE : Billion Rise - a company believed to be linked to Hong Kong property giant Cheung Kong Holdings - has put in the top bid of S$110.4 million for a residential site at West Coast Crescent.

    This works out to S$305 per square foot per plot ratio for the 99-year leasehold parcel.

    Analysts expect a break-even price of between S$680 and S$720 per square foot for a new condominium on the site. The units are expected to be marketed at around S$800 per square foot.

    The next highest offer of S$108.9 million came from Tian Hock Properties, and the lowest bid was S$50 million from Scantech Development.

    All in, the Urban Redevelopment Authority received 12 offers for the land parcel.

    Consultant CB Richard Ellis said the strong response signals developers' confidence in the suburban segment despite the current lukewarm response to new projects.

    Consultant Knight Frank expects the new condominium to yield about 300 units.

    It believes the high level of interest for the site is because it is close to schools and has a good view of Clementi Park, West Coast Park and the sea.

    The site spans 12,000 square metres and has a maximum permissible gross floor area of 33,600 square metres. This means that the proposed condominium could be built up to about 36 storeys.

    The winner of the award is expected to be announced after the bids have been reviewed. - CNA/ms


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  10. #10
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    Talking Re: Residential rents seen rising further

    Quote Originally Posted by typical singapore student
    That's what makes this forum so special. It has no agenda at all and welcomes all points of view.

    Would you rather be spoonfed all good news? Or would you rather use your own brain to justify your thoughts and actions?
    Developer like Billion Rise ,MCL etc had invested million of dollar become topbid for the residential land site in singapore.You mean these million dollars investments are to spooned people with good news.With these high land cost bought by developers. The property price will definitely be going to up again.Huat Ah$$$$$$$$$$$$$$$$$$$$$$$Cheong AH$$$$$$$$$$$$$$$$$$$$$

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