Due to lower demands caused by stricter policies for foreign
workers and a large supply of new homes, the Singaporean home rental
market is expected to face difficulties in 2014. Rentals are forecast to
stagnate or even fall, which would be the first decrease seen in four
years. The Urban Redevelopment Authority's Private Residential Rental
Index, which measures home rentals, grew 1.35 % during the first three
quarters of 2013, while the estimated growth for the entire year is 1.45
%, a drop from the 2.1 % recorded the previous year - 2012.
The next few years are going to bring an upsurge in rental options for Singaporean tenants, which will probably cause them to rent nearer to the city center or the MRT stations. This increase in choices is likely to harm the rental returns of projects that are not very well located, which means competition in the home rental market may very well harden, with rental rates potentially dropping by up to 5 % in 2014.
This situation is expected to favor apartments that are bigger and better located. Apartments larger than shoebox units are likely to be considered the better option by potential tenants, given the same amount of rental. Because of this, demand for shoebox units is expected to decrease in 2014, which means that these type of condominium units will be hampered by the rental market trends.
With about 16,000 new homes completed in 2013 and available at the beginning of 2014, and another about 19,000 new homes to be completed at the end of 2014, the supply is likely to surpass demand. In addition, the tighter foreign worker policies will furthermore weaken demand for apartments for rent.
In 2014, the volume of leasing transactions is expected to remain high, as more units are consistently entering the market. Because tenants normally prefer new apartments, the possibility of them terminating their previous leases and getting new landlords is very high.
Moreover, a surge of new employees signing a shorter lease is expected to be caused by the trend that they be put on contract basis. The shorter lease is typically less than a year, implying a potentially high volume of leases, and the willingness to pay a higher rent. In contrast, occupancy rates are forecast to continue their decrease - the vacancy rate (of 6.1 % in September 2013) is expected to increase to up to 8 % in 2014.
The next few years are going to bring an upsurge in rental options for Singaporean tenants, which will probably cause them to rent nearer to the city center or the MRT stations. This increase in choices is likely to harm the rental returns of projects that are not very well located, which means competition in the home rental market may very well harden, with rental rates potentially dropping by up to 5 % in 2014.
This situation is expected to favor apartments that are bigger and better located. Apartments larger than shoebox units are likely to be considered the better option by potential tenants, given the same amount of rental. Because of this, demand for shoebox units is expected to decrease in 2014, which means that these type of condominium units will be hampered by the rental market trends.
With about 16,000 new homes completed in 2013 and available at the beginning of 2014, and another about 19,000 new homes to be completed at the end of 2014, the supply is likely to surpass demand. In addition, the tighter foreign worker policies will furthermore weaken demand for apartments for rent.
In 2014, the volume of leasing transactions is expected to remain high, as more units are consistently entering the market. Because tenants normally prefer new apartments, the possibility of them terminating their previous leases and getting new landlords is very high.
Moreover, a surge of new employees signing a shorter lease is expected to be caused by the trend that they be put on contract basis. The shorter lease is typically less than a year, implying a potentially high volume of leases, and the willingness to pay a higher rent. In contrast, occupancy rates are forecast to continue their decrease - the vacancy rate (of 6.1 % in September 2013) is expected to increase to up to 8 % in 2014.
We are a Singapore home loan and Compare Home Loan consultancy firm offering free expert advice on compare home loan mortgage financing packages using the most advanced loan analysis system.
No comments:
Post a Comment