Nov 21, 2008
Private home rents may fall 15%
Selling prices of top-end units could drop by up to 22% in months ahead
By Joyce Teo
PRIVATE home rents in Singapore are set to drop by up to 15 per cent next
year, as the reality of a slowing economy hits home.
Property consultants say landlords are expected to become more flexible,
given factors such as ongoing job cuts.
In a report released yesterday, Savills Singapore said the onset of a
technical recession, coupled with a weaker employment market and slower
expatriate arrivals, will contribute to the fall in rents.
So far, the impact on the local rental market has been limited despite rents
beginning to come off their peaks, it said.
'The quarters ahead should, however, see a more entrenched rental decline as
demand weakens in the face of a global economic slowdown,' said the report.
Given that the full force of the financial crisis erupted in mid-September,
the rental property market has yet to feel the full impact, Savills
Singapore said. In terms of top-of-the-market rents, known as prime rents,
it expects a fall of 7 to 13 per cent next year.
Another consultancy, Knight Frank, is projecting a bigger fall of 10 to 15
per cent in average islandwide rents next year.
The Urban Redevelopment Authority recorded a 0.9 per cent dip in private
home rents in the third quarter, the first fall after 17 quarters of growth.
'Some landlords are already cutting rents to retain tenants. We may see more
aggressive cuts by landlords if more multinational companies cut their
headcounts,' said Knight Frank's director of research and consultancy, Mr
However, Savills Singapore's associate director of residential sales, Mr
Patrick Lai, believes the fall in rents will not be big as there is still
'There is still a steady number of expatriates coming in as Asia,
particularly Singapore and Hong Kong, is where companies want to be now. To
put it bluntly, we are benefiting from the meltdown in other parts of the
world,' he said.
However, rents are more negotiable now as tenants have more choice, said Mr
This quarter, new supply entering the market includes the second tower of
The Sail @ Marina Bay with 681 units, the 173-unit St Regis Residences and
the 110-unit Paterson Residence, Savills Singapore said.
Next year, landlords in prime areas will have to contend with even more
competition as more condos are completed.
Also, most expats are now on local terms, or arrange their own leases, and
they usually do not want to use all their rental budget, said Mr Lai.
A property agent specialising in expat rents said she has not completed any
rental deals since October.
'Last year, I was busy throughout the year. This year, it started to slow
from January. It is so quiet now,' she said.
'Those who have advertised for a few months are willing to lower their
asking rents but many others continue to hold on to the same asking levels.'
A renovated 1,650 sq ft unit at Pinewood Gardens at Balmoral Park is now
available at $6,000 a month or $3.64 per sq ft - already lower than most
other done deals at the development - but a potential tenant is willing to
take it at only $5,000 a month or $3.03 psf, she said.
In a separate report, Savills Singapore said it expects prices of high-end
and super-luxury homes - which are more vulnerable to the deteriorating
global investment climate - to fall 22 per cent from the current quarter
until the end of next year. Islandwide, the decline in sale prices over the
same period is placed at a smaller 10 to 15 per cent, as mass-market homes
catering mostly to upgraders should see a limited price fall.
Rental yields, however, have risen as the fall in rents is smaller than the
fall in prices, said Mr Ku Swee Yong of Savills Singapore.
Knight Frank's Mr Mak added: 'Residential rents have moved up very fast in
the past three years and they could come down just as fast.