Rents of luxury homes to dip further

August 22, 2011  

Rent of high-end homes might keep falling in the light of an increased supply and less generous housing packages for expatriates.

Luxury home rents have dipped by about 2 per cent in six months, according to GPS Alliance associate agency head Jack Teo, while as an OrangeTee agent said, some of his clients have had to cut rents by about 5 to 7 per cent to land a tenant.

Upscale projects such as The Orchard Residences, Cliveden at Grange and The Orange Grove have recently been completed and they have added to the number of units on the market.

Property agents said landlords asking for a monthly rent above $10,000 are currently finding it harder to find tenants.

Pressure on rents is also coming from cost-conscious firms putting expat staff on local terms. This means they no longer get a separate housing allowance but must budget for rent from their salaries instead.

‘Multinational corporations have lower budgets now so there’s no longer a separate housing package. And when a tenant has to budget out of his pocket, he is usually more sensitive to price and tends to want to spend less,’ said the OrangeTee agent.

The quieter market can also be partly attributed to a seasonal drop as expats usually look for homes from May to early July before the August school term starts.

Markus Tay of Luxe Group said it takes about 2 to 5 months to find a tenant for luxury homes now – about 30 per cent more time than 6 months ago. The market had started slowing then as the supply of homes started to enter the market.

Although landlords eager to score a tenant have cut rents, prices have not declined much overall as some owners have holding power and might be unwilling to budge from their initial asking price.

The luxury market might firm up again next year once the number of posh completions start to slow and the segment stabilises, he added.

Property experts said upscale homes are usually owned by wealthy individuals who see their purchase as a form of investment and wealth preservation, and so are are less concerned about achieving high rental yields.

Rental yields for prime areas are among the lowest across the island. According to a Kim Eng report, Orchard Road yields were just 2.8 per cent, Sentosa homes offered 2.6 per cent while homes in Newton languished in last place with 2.4 per cent.

Suburban yields were as high as 4.1 per cent in Tampines and 4.8 per cent in Sengkang – the most attractive estate in the rental market.

High-end rentals set to drop further

Aug 22, 2011 - PropertyGuru.com.sg

  

Rents of high-end homes in Singapore will likely fall further, on the back of healthy supply and less generous packages for expats.

Jack Teo, Associate Agency Head of GPS Alliance, said luxury home rents have dropped by two percent in six months. He noted that some of his clients have had to slash rents by as much as seven percent to attract tenants.

High-end projects such as Cliveden at Grange, The Orange Grove and The Orchard Residences have recently been completed, adding to the number of units being offered on the market.

Meanwhile, some property agents said landlords asking for a rent of S$10,000 a month are having difficulty finding tenants. Pressure on rents is also seen in some cost-conscious firms that apply local terms for expats. This means they must now pay for rent from their salaries instead of enjoying a separate housing allowance.

“Multinational corporations have lower budgets now so there’s no longer a separate housing package. And when a tenant has to budget out of his pocket, he is usually more sensitive to price and tends to want to spend less,” said Teo, who is also a property agent.

The quieter property market can also be attributed to a seasonal drop, as expats typically look for homes between May and June before the school term in August.

Markus Tay from Luxe Group said it takes two to five months to find a tenant for luxury homes today, about 30 percent more time than six months ago.

He noted that the high-end market will likely rebound next year, once the number of completions starts to slow and the segment stabilises.

Some property experts noted that high-end homes are commonly owned by wealthy individuals who see their purchases as a form of wealth preservation and investment, thus they are less concerned about achieving high rental yields.

Rental yields for prime areas are among the lowest in Singapore. In a report by Kim Eng, rental yields in Orchard Road were just 2.8 percent, while Sentosa and Newton offered 2.6 percent and 2.4 percent respectively. Suburban rental yields, on the other hand, were as high at 4.1 percent, with Sengkang, the most attractive estate in the rental market, at 4.8 percent.

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