SINGAPORE: Rentals for private homes may have hit record prices and volume in 2012, but some market experts said the market will be slower in 2013.
Median rents as of October 2012 has reached S$3.75 psf, 14.3 per cent higher than the S$3.28 psf in Jan 2011.
Commodities trader Pushkar Jamnerkar will be looking to work and live in Singapore with his family for the second time. However, property prices have spiked since he left for Hong Kong in 2008
As a foreigner, buying a property now would also mean having to pay 10 per cent of the property price for the Additional Buyers’ Stamp Duty (ABSD). So renting a unit is an option that the Indian national is not ruling out.
Pushkar Jamnerkar, vice—president of Transammonia DMCC, said: "I have seen some older properties, their room sizes are bigger. General upkeep of the property is not so good. And they might come up for enbloc, that fear is always there. I wouldn’t like to keep on shifting from one property to another."
Tenants’ preference for newer properties has been driving up rentals to record highs (on a psf basis) in 2012.
With new private homes getting smaller, rents on a per dollar square foot basis have been getting higher —— this despite the rising number of vacant private homes.
Ku Swee Yong, CEO of IPA, said: "There are many tenants who are long—term in Singapore who are also changing from rental to newer ones. And when you change to a newer one, the dollar psf rental tends to be higher."
Property consultancy Savills Singapore noted that median rents have reached a new high of S$3.75 per square foot in October. So far, the first 10 months of 2012 have seen 42,139 leases being signed, potentially breaking last year’s record of 45,062 transactions.
Yet, experts said Singapore’s tighter foreign manpower policy may be a dampener to the leasing market as there will be fewer expats with a much leaner leasing budget.
Png Poh Soon, head of research at Knight Frank, said: "Residential rentals, we think there will be a mixed bag of performance. Overall, rental should come down five to 10 per cent. But certain locations, particularly those in the suburban regions, should hold."
Looking ahead, experts said the expected increase of shoebox units available for leasing may keep rentals competitive in Singapore. The stock of shoebox units is expected to increase, hitting about 9,700 units by 2015. But unlike existing units, many new ones will be found in suburban areas.
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