Several properties getting better rental yields

August 23, 2011

During difficult economic times, rental properties are less profitable for landlords. However, there are still some condominiums where rental yields can hit 5.7 percent.

Condos such as Blossoms@Woodleigh, Adam Park Condo, The Jade and Far Horizon Gardens, have yields higher than five percent.

According to the latest study by Kim Eng Research, areas such as Choa Chu Kang, Sengkang and Woodlands have yields ranging from 4.4 to 4.8 percent.

However, rental yields in some prime areas failed to keep up. Orchard, Sentosa and Newton posted yields of between 2.4 and 2.8 percent.

Market analysts believe quantum prices of properties in a neighbourhood play a major role in determining the average rental yield.

“If you buy a mass-market home for S$1.5 million, you might be able to get between S$4,000 and S$6,000 in rent, depending on location,” said Chris Koh, Director at Dennis Wee Group.

“That’s compared to a Sentosa place that could cost up to S$3 million and bring in only S$8,000 a month.”

Eugene Lim, ERA Realty Key Executive Officer, noted that leasehold properties are typically cheaper than freehold ones. Most leasehold properties are in suburban neighbourhoods, a factor which may have helped increase rental yields.

“Tenants aren’t concerned about whether a property is freehold or has a 99-year lease. All they want is somewhere that looks nice in a convenient location,” said Lim.

Source : PropertyGuru – 23 Aug 2011