Rental curves for Singapore

Industry experts predict a stellar year for Singapore’s rental market, with a rise in both volume transactions and value in 2012.

According to a Q4 brief from Savills, the value of all leasing transactions throughout the first 10 months of 2012 has already surpassed the yearly totals of 2000 through to 2010. The yearly transaction value of 2011 set a record at S$218 million (US$178,513,799), however 2012 looks set to pass that with the 10 month total of 2012 standing at S$208 million (US$170,324,715).

The brief estimates leasing volume to hit around 48,000 transactions. There have been 42,139 leases in the first 10 months of 2012. Last year’s total leasing volume set a a record high of 45,062.

Both condos and houses look set to sign out of 2012 on a high note as the y-o-y rise is reported across all leasing sectors. The bulk of transactions came from condo leases with 37,886 transactions in the first 10 months, while house leases were reported at 4,253. Full-year 2011 transactions for condos and houses were 40,222 and 4,840, respectively.

According to the Urban Redeveloping Authority (URA), median rents for condos (non-executive) and apartments reached a new high of S$3.75 (US$3.1) per sq ft per month in October. Translating as 0.5 percent m-o-m and a seven percent y-o-y increase. Meanwhile, houses enjoyed a 0.4 percent m-o-m increase with median rents of S$2.65 (US$2.2) per sq ft per month throughout October.

However, prime rents in high-end condos took a dip in Q4 2012 to S$4.88 (US$4) per sq ft per month, from S$5.27 (US$5.27) per sq ft per month in Q4 2011.

According to Savills, limited rental budgets, coupled with the increasing supply of luxury homes could correct high-end rental rates by five to ten percent, with luxury rental rates falling to less than S$5 (US$4.1) per sq ft per month in 2013.

The fall can be attributed to a surge in high-end completions over the past few months and a decrease in big budget tenants. Overall leasing demand, however, has remained high, backed by high employment and stable economic growth, said the brief.

Singapore has seen a surge in luxury condos through 2012 with some major completions such as Reflections, The Trizon, Floridian, Double Bay Residences and Waterfront Waves, leading to a significant rise in vacant units island-wide. The percentage of vacant units has leaped 32 percent from the trough in Q1 2011. Q3 2011 saw vacancy rates at 6.1 percent, with 14,198 vacant condo units and 2,679 vacant houses. The vacancy rate increases in tandem with a surge in condo completions, said the brief.

According to the URA 91,869 new homes will be released to Singapore’s real estate market in the next five years. Over half have already sold.



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