The rental rates for residential units are scaling the peaks in property prices, with rents for condominiums boosting a price hike of 5.8 per cent over the first half of 2010.
Online PR News – 20-July-2010 – – The rental rates for residential units are scaling the peaks in property prices, with rents for condominiums boosting a price hike of 5.8 per cent over the first half of 2010.
The Urban Redevelopment Authority (URA) has release data showing the surge in median rentals of non-landed residential properties to $32.41 per square metre (PSM) in May from $30.54 psm in January, while rental for units in the central region stands at an even higher price of $36.89 psm. Currently, the maximum monthly rental for non-landed residential properties in central Singapore stands at $114.58 psm.
Across Singapore, maximum rental swerves between $33.65 psm to $60.87psm. while minimum rentals varies between $10.18 psm to $14.36 psm.
Market watchers commented that this surge in residential rents is a direct result of an economy that is picking up as well as a strong property market. The rising number of property owners who increase rent in a bid to earn higher returns could be another contributing factor to the rental surge.
Mr James Nuben of Rikvin Corporate Services said that the increase in housing demand by more foreign individuals incorporate a Singapore company and relocate to the country also adds yet another factor to the rise in rental figures.
“We get a large number of foreign businessmen looking to incorporate a company in Singapore and wanting to move here to run their operations because the quality of living is very good. Plus, more international companies are also setting up a presence in Singapore and bringing in more foreign talent, who will require accommodations,” said Mr Nuben.
Rikvin Corporate Services specialises in company incorporation as well as help foreign individuals and companies apply for the Employment Pass or EntrePass.
“Business have started to relocate to Singapore and are bringing in a lot of foreign workers, which have increased demand for residential housing, as compared to the first half of last year, when companies were shedding staff,” confirmed Donald Han, managing director of Cushman and Wakefield.
However, Mr Colin Tan, head of research and consultancy at Chesterton Suntec International thinks otherwise - that the rental hikes are due to a sharp drop in housing supply. The number of demolitions conducted in the fourth quarter last year saw 1,441 units torn down compared to the 1,400 units available.
Mr Tan said that this is because there were more collective sales, resulting in more units disappearing. The demolitions caused a drop in the number of units - only 1,407 units, available for rent for the first quarter.
“The higher number of demolitions is probably a one-off effect. The numbers of demolished units returned to about 400 units-odd in the first quarter of this year. Rentals will increase as there are fewer units available and there is a high demand for them,” added Mr Tan.
On a brighter note, Mr Tan said he expects the rental hikes to stop climbing in the next few months.
However, Mr Han said Singapore’s economic growth will bolster rental prices, marking an increase of 5 per cent to 8 per cent by the end of the year. This increment makes it a good time for homeowners who want to lease out their properties to guard against volatile markets and inflation.
“Yields have risen slightly to 3 per cent to 3.8 per cent and are likely to go up over 4 per cent at the end of the year. With the low interest rate of 1 per cent to 1.2 per cent, this is a good time for residential yields,” said Mr Han.
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