Originally Posted by
reporter2
May suburban condo rents down 4.8%: SRX
This is steeper than falls of 3.7% in CCR and 3.2% in RCR; HDB rents in mature estates ease 2.8%
June 15, 2017
KALPANA RASHIWALA
PRIVATE apartment and condo rents in the suburbs have fallen at a faster clip between May 2016 and May 2017 compared to units in the prime areas and city-fringe locations.
Based on SRX Property's flash estimates data for last month released on Wednesday, its rental index for non-landed private homes in the Outside Central Region or OCR eased 4.8 per cent year on year. This was followed by a 3.7 per cent decline in the index for the Core Central Region (CCR) and 3.2 per cent drop in the Rest of Central Region (RCR).
OrangeTee's head of research and consultancy Wong Xian Yang attributed the bigger rental decline in OCR to the fact that the region made up the bulk or about 58 per cent of the record volume of 20,803 private homes (including landed properties but excluding executive condos) that were completed last year, according to data from the Urban Redevelopment Authority (URA). The RCR's share of this figure was 31 per cent and the CCR, 11 per cent.
"With the majority of incoming completions also expected to be located in the OCR, the pressure on OCR rents is expected to continue," he added.
Going by URA's figures, 34,911 private residential units are slated for completion from Q2 2017 to Q4 2020. Of this figure, around 51 per cent would be located in the OCR, with CCR and RCR taking 17 per cent and 31 per cent of the pie respectively. (The percentage share figures do not add up to 100 per cent due to rounding.)
SRX's overall rental index for non-landed private homes for May 2017 was down 3.9 per cent year on year and also 19.7 per cent below its peak in January 2013.
On a month-on-month basis, the flash estimate index value for May 2017 reflected a 0.8 per cent drop, after remaining unchanged in April 2017.
Based on data collated by SRX, an estimated 4,650 non-landed private homes were rented last month - up 12.5 per cent from the 4,134 units rented in April 2017 and also 6.1 per cent higher than the 4,381 units in May 2016.
Mr Wong predicts private residential rents will still trend lower this year as "demand struggles to catch up with new supply introduced over the past three years". Based on URA figures, the number of private homes completed in 2014, 2015 and 2016 was 19,941 units, 18,971 units and 20,803 units respectively.
In 2017, another 15,629 units are expected to be completed which is still 17 per cent higher than the annual average over the past 10 years (2007-2016) of 13,319 units.
"However, private residential rents could potentially find their footing in 2018, as the expected number of completions in 2018 would fall steeply to 9,014 units."
Moreover, Mr Wong highlighted, private residential occupancy rates have risen for the past three quarters (Q3 2016 to Q1 2017), despite the high number of completions in 2016. "This suggests that the rental market may be more resilient than expected," he added.
In the HDB rental segment, SRX Property's flash estimates for May 2017 showed that the rental index for mature estates slipped 2.8 per cent year on year from May 2016. This was a smaller rate of decline compared with the 4.5 per cent drop in non-mature estates over the same period. "Mature estates tend to be more centrally located and have more amenities in the vicinity, leading to higher rental demand," said Mr Wong.
SRX Property's overall rental index for HDB flats for May 2017 was 3.6 per cent lower year on year and also 13 per cent below its peak in August 2013. That said, the flash estimate for May 2017 reflected an increase of 0.7 per cent month on month, after remaining almost unchanged in April 2017.
"The rental trend for HDB flats remains negative for 2017 in the face of continued stiff competition from the private property market and constrained growth in the number of foreigners," said Mr Wong.
SRX Property estimated that 1,873 HDB flats were rented in May 2017, close to the 1,872 units in April 2017, but 3.5 per cent lower than the 1,940 units in May 2016.
Reply With Quote
