IT’S
A TENANTS MARKET
It’s definitely a tenant’s market now. The
supply of tenant’s in the market is inversely proportional to the supply of
houses in the market.
The Urban Redevelopment Authority (URA)
released the real estate statistics for 4th Quarter 2014.1 on 23rd
January 2015 in it’s website wherein one can see that,
A LOOK AT THE RENTAL PRICES OF PRIVATE
RESIDENTIAL PROPERTIES
Rentals of private residential properties
fell by 1.0% in 4th Quarter 2014, higher than the 0.8% decline in 3rd Quarter 2014
(see Annexes A-3 & A-4).
For the year 2014 as a whole, rentals of
private residential properties fell by 3.0%, compared to the 0.9% increase in
2013.
Rental Index of residential properties
SUPPLY IN THE PIPELINE
Based on expected completion dates reported
by developers, 24,796 units (including EC’s will be completed in 2015.
Another 25,717 units (including EC’s) are
expected to be completed in 2016.
In comparison, 23,298 units (including EC’s)
were completed in 2014.
These figures show that there is going to
be an additional influx of vacant units in the next 2 years from now.
This is going to add to the units already
available for rent in the market.
STOCK AND VACANCY
The stock of completed private residential
units (excluding EC’s) increased by 6,304 units in 4th Quarter 2014.
The vacancy rate of completed private residential
units (excluding EC’s) increased to 7.8% at the end of 4th Quarter 2014, from
7.1% at the end of 3rd Quarter 2014.
These figures indicate that Projects that
have TOP already have added to the stock of supply of new units, many of which
maybe available for rent in the market.
“In fact, during the
Lehman crisis in Q4 2008, the vacancy rate was at 6.1 percent, which means the
current percentage has increased quietly to a higher rate than what was during
the 2008 Economic crisis.
But naturally, this
increase is mainly attributed to the cooling measures introduced over the years
and the global uncertainty.
Potential investors
are now taking a wait-and-watch approach.
Adding to this is the
crude oil crisis which has affected jobs in this industry leading to lay-offs.
World economic growth
in 2014 was weak and is still recovering at a slow pace. Economic growth around
the world is uneven.
In Singapore, there
have been lay offs in a few sectors and there is a rise in expatriates not
seeing employment contract terms being renewed upon expiry, leading to a growth in vacant stock in houses.
There isn’t a huge
influx of expatriates coming into Singapore , since the Government
adopted policies to encourage the Citizens and residents to get priorities with
regards to jobs and is stiff with granting work permits and new employment
passes unless the skill is not available locally and is absolutely required by
a company. This again is a factor that
contributes to vacant stock in houses.
Last but not the least
the cooling measures taken by the Government have now started to show it’s
effect.
Foreigners are
finding Singapore
as a less attractive option for employment compared to other countries now. All
this definitely leads to vacant stock in houses.
The market is already seeing a decline in the number of transactions in the higher echelons of the market, so the prospect of any decline in the number of empty units looks remote.
All this by far definitely indicates that it’s a tenant’s market and going to be so for a while to come.
The market is already seeing a decline in the number of transactions in the higher echelons of the market, so the prospect of any decline in the number of empty units looks remote.
All this by far definitely indicates that it’s a tenant’s market and going to be so for a while to come.