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Singapore’s property market favouring tenants

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Singapore’s residential leasing market is facing downward pressure on rents, a result of increased supply coupled with softening demand. Despite high transaction volumes, vacancy rates are increasing and rents are falling.

According to a new report from Savills, quarter-on-quarter (QoQ) leasing volumes in Singapore for Q2 2015 increased by 10.9 per cent, from 15,435 to 17,262 transactions.

The growth came mainly from the Outside Central Region (OCR), which saw quarterly transactions increase by 13.7 per cent, to 5,672 transactions. Savills attributed the increase in transactions to standard two-year leases being replaced by more one-year tenancies.

With more completions, supply is increasing and the number of private residential homes in Q2 2015 reached 318,524 – a 2.2 per cent increase quarter-on-quarter. Most of the new supply is within the OCR, which saw 124 per cent growth to 5,643 units, compared to Q3 2014.

As Singapore offers overseas talents plenty of job opportunities, there is greater demand for housing leases for expatriates employed on local terms.

However, the rise in demand from these tenants is insufficient to keep up with the supply of new private residential units. Rents dropped 1.1 per cent QoQ in Q2 2015, and vacancy rates were at a nine-year high.

Senior Director of Savills Research Singapore Alan Cheong believes that it will remain a tenants’ market as supply of private residential units is expected to exceed demand.

Taken from iProperty

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Guest Wednesday, 21 August 2019