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Home owners renting out their properties made windfall gains last year, as rents posted their highest annual growth in at least 11 years.

Rents of private homes islandwide rose by between 10 and 15 per cent for the whole of last year, according to estimates by property consultancy Knight Frank.

Official figures will be released next Friday.

This breathless pace outstrips the last two property upturns in the 1990s, when rents grew by less than 8 per cent a year.

And in a surprise twist, rents in suburban areas such as Changi and Yishun jumped more than those in prime districts during the last quarter of the year.

In the last three months of 2006, eastern areas such as Changi and Bedok posted the highest rental growth of 21.9 per cent over the previous three months. Yio Chu Kang and Yishun followed closely behind, with 18.4 per cent growth.

In contrast, rents at luxury condominiums grew by a measly 2.4 per cent in the same period.

Even taking full-year rental figures into account, luxury residences were outstripped by homes in the more modest Marine Parade and Katong areas.

Rents in this prime East Coast belt rose by 24 per cent, compared with 21 per cent for luxury homes.

Zooming in on selected mass market condominiums shows even better results.

A Citigroup report recently highlighted projects such as The Bayshore, Bayshore Park and Mandarin Gardens, where rents rose by at least 20 per cent over the last year.

All three are 99-year leasehold condos in the East Coast.

In comparison, rents at the high-end freehold Scotts 28 rose by a slower 11 per cent last year.

Suburban rents grew so strongly because these areas have remained dormant in the last few quarters and are thus growing from a lower base, said Knight Frank’s director of research and consultancy, Mr Nicholas Mak.

However, the higher suburban rentals are still significant - and may be a sign that the long-awaited price rebound at the lower end of the property market is well on its way.

When rents rise, sale prices usually follow suit, as more investors are drawn to buy homes.

Despite the ’surprisingly high’ spike, rents across the board still have room to grow, added Mr Mak.

He noted that current rents as a whole are still only slightly above 2000 levels, because rents plunged about 32 per cent when the property market crashed in 1998 and have stayed flat since then.

Mr Mak expects rents across the board to rise even more this year, by between another 7 and 12 per cent.

They will be boosted by an influx of expatriates and a shortage of homes when collective sale estates are torn down, he said.

But while the rising rental market is a blessing for landlords, it is anathema to their tenants.

Many, like expat teacher David Rogers, have had to fork out more to secure a place to stay.

Mr Rogers, 41, had arranged to rent a condo in Orchard Road for $3,000 a month at the beginning of this year. But within a few weeks, the owner was asking for more.

To clinch the unit, he ended up having to pay $3,200.

‘A few years ago, it was a tenant’s market and it was very easy to get an apartment for a fairly good price,’ he said.

‘Now that property prices have gone through the roof, it’s very difficult to get a bargain.’

Source : Straits Times - 20 Jan 2007

Home rentals along prime shopping belt likely to rise by 20%-25% this year

MARINA Bay homes may be hogging the headlines with their sky-high prices, but Orchard Road is still Singapore’s foremost luxury residential district, says property entrepreneur Simon Cheong.

The chairman and chief executive (CEO) of boutique developer SC Global expects demand for Orchard Road homes to rise this year, pushing up prices and rentals along the prime shopping stretch.

Rents there are likely to surge by 20 to 25 per cent, and prices will jump even more, Mr Cheong said in an interview yesterday.

These predictions have been revised upwards from his estimates last August, when he was quoted as saying that Orchard Road rents could go up by 15 to 20 per cent.

A big reason for his more bullish projections now would be the recent record prices at Marina Bay. One unit at 99-year leasehold Marina Bay Residences reached an all-time high of $3,500 per sq ft (psf), eclipsing prices of freehold Orchard Road homes.

‘If Marina Bay prices are so high, can you imagine what Orchard Road prices will be? Definitely stronger,’ said Mr Cheong.

Apart from The Lincoln Modern in Newton, most of SC Global’s high-profile projects are in the Orchard Road area.

They include The Ladyhill near Nassim Road and The Boulevard Residence (BLVD) at Cuscaden Walk.

Although high-end home prices already climbed 35 per cent last year, Mr Cheong believes that ‘the market has just begun’.

He expects a shortage of luxury homes in Orchard Road once the collective sale estates are torn down. At the same time, demand for such homes will increase with the ongoing remaking of the area.

‘There are very few Orchard Roads in the world,’ said Mr Cheong. ‘It is unique because it’s one continuous street of lifestyle, entertainment and shopping.’

He is backing his predictions with two upcoming projects in the area. The first, The Marq on Paterson Hill, will be launched in the second quarter of this year and is being billed as the developer’s ‘most exclusive condominium’ to date. The other is to be built on the former Hilltops Apartments.

The Marq, on the former Paterson Tower site, has two 24-storey towers and 60 to 70 units.

One tower will feature apartments, each with a private lap pool, that take up entire floors.

These units will each be 4,500 sq ft, catering to the current demand for large apartments, said Mr Cheong. The smallest unit in the project is a largish 2,800 sq ft, while the biggest will be a 11,000 sq ft ’super penthouse’.

Although prices for units at The Marq has not yet been finalised, Mr Cheong said the project will be more expensive than The Ladyhill and BLVD. The latter developments were launched at $1,500 psf but have since seen units sold at more than $2,000 psf.

Mr Cheong expects The Marq to fetch monthly rentals of $6.50 psf to $7 psf, which translates into a conservative price of at least $2,800 psf, said consultants.

Mr Ku Swee Yong, director of marketing and business development at Savills Singapore, thinks prices are likely to be between $2,800 psf and $3,200 psf.

He noted that prices at 99-year leasehold Orchard Turn, another upcoming project in the area, are being estimated at $2,500 psf.

‘Since The Marq is freehold, it should be pricier,’ he said.

Already, The Marq has received enough interest from potential buyers to account for almost the whole condominium, Mr Cheong said.

But he is in no hurry to find buyers, of whom he expects 50 to 60 per cent to be foreigners.

Also, he is not worried about speculators in Marina Bay shifting their attention to Orchard Road.

‘In Orchard Road, particularly for freehold developments like The Marq, I think it’s not a speculator’s market,’ he said.

‘It’s for the ultra-rich who fly in for half a day and decide to buy; they’re not here to queue. It’s not that kind of market.’

RENTAL OUTLOOK

Mr Cheong expects The Marq to fetch monthly rentals of $6.50 psf to $7 psf. This means a conservative price of at least $2,800 psf, say consultants.

Source : Straits Times - 18 Jan 2007

Foreigners are boosting demand for condominium apartments, say experts
 
While the euphoria and hype of the high-end residential property market have yet to filter down to the mass and mid-market segment, where home prices are still in the doldrums, it is a happier situation in the rental market.

Rents for private residential apartments across the board are edging towards their 1997 peak, say experts.

“Rentals are picking up quite a lot — by 8 per cent to 10 per cent on average — much higher than sale prices. We’re seeing a lot of foreigners and this is what is boosting the market. They are only 10 per cent to 20 per cent below the peak,” said Mr James Lee, founder and chief executive of James Lee Realty.

In comparison, prices of mid and mass- market private condominiums are still between 30 per cent and 40 per cent below the peak. The spike in rentals is not confined to the private sector; even Housing Board flat rentals are seeing a rise.

In some prime areas, rents have gone up by 20 per cent while rents for HDB flats in suburban areas like Jurong have gone up by about 10 per cent according to anecdotal evidence, say market watchers.

For example, said Mr Lee, a month ago his agency secured a lease for a two-bedroom apartment in Spring Dale condominium at Upper Bukit Timah for $1,800 per month. The earlier rental which expired in October was $1,400 per month.

The rise has been even steeper in prime areas like Balmoral Road in District 10. “A three bedroom unit used to be signed on for $6,000 a month two years ago. Last month,

we rented one out for $8,500,” said Mr Lee.

He reckons rentals have jumped by about 20 per cent in the last 18 months and are set to go even higher.

In the mid-market segment, too, rentals are beginning to go beyond the reach of young professionals.

Ms Hena Yeo, a young professional renting a studio apartment in Bayshore Park, snagged a good deal in mid-2005 when she rented a 624-square foot apartment for $1,050 a month.

It was a bargain, considering the locale. For her money, Ms Yeo is getting the works, with full condominium facilities as well as the added bonus of Bus Plus service to the financial district, a small supermarket, a laundromat and wireless broadband access at the clubhouse café.

“I’m happy here. By renting, I get the facilities I need without having to pay the maintainance fees,” said Ms Yeo.

But her lease expires in May and should she still want to continue staying at Bayshore, it is going to cost her more than $1,500 a month — almost 50 per cent more what she is paying now.

“Prices at Bayshore Park have been fluctuating, several months ago the rental price for a two-bedroom there was at $1,500. I recently rented one out at $1,800,” said Mr Lee.
.
Prices at Bayshore — a typical example of a mid-market condominium — are approaching the peak of 1997, when rentals for two-bedrooms reached $2,400.

In the online classified portals, landlords are asking for rentals of between $2,000 and $2,200. On a per-square-foot (psf) basis, that translates to $2.20psf to $2.40psf.

According to Knight Frank’s real estate highlights report for the third quarter of 2006, the rental for new private residential units in the East Coast ranged between $1.65psf and $2.20psf.

But some condominiums such as Bayshore Park are doing even better. Expect to see more such rental hikes in the new year, say experts.
Foreigners are boosting demand for condominium apartments, say experts
 
WHILE the euphoria and hype of the high-end residential property market have yet to filter down to the mass and mid-market segment, where home prices are still in the doldrums, it is a happier situation in the rental market.

Rents for private residential apartments across the board are edging towards their 1997 peak, say experts.

“Rentals are picking up quite a lot — by 8 per cent to 10 per cent on average — much higher than sale prices. We’re seeing a lot of foreigners and this is what is boosting the market. They are only 10 per cent to 20 per cent below the peak,” said Mr James Lee, founder and chief executive of James Lee Realty.

In comparison, prices of mid and mass- market private condominiums are still between 30 per cent and 40 per cent below the peak. The spike in rentals is not confined to the private sector; even Housing Board flat rentals are seeing a rise.

In some prime areas, rents have gone up by 20 per cent while rents for HDB flats in suburban areas like Jurong have gone up by about 10 per cent according to anecdotal evidence, say market watchers.

For example, said Mr Lee, a month ago his agency secured a lease for a two-bedroom apartment in Spring Dale condominium at Upper Bukit Timah for $1,800 per month. The earlier rental which expired in October was $1,400 per month.

The rise has been even steeper in prime areas like Balmoral Road in District 10. “A three bedroom unit used to be signed on for $6,000 a month two years ago. Last month,

we rented one out for $8,500,” said Mr Lee.

He reckons rentals have jumped by about 20 per cent in the last 18 months and are set to go even higher.

In the mid-market segment, too, rentals are beginning to go beyond the reach of young professionals.

Ms Hena Yeo, a young professional renting a studio apartment in Bayshore Park, snagged a good deal in mid-2005 when she rented a 624-square foot apartment for $1,050 a month.

It was a bargain, considering the locale. For her money, Ms Yeo is getting the works, with full condominium facilities as well as the added bonus of Bus Plus service to the financial district, a small supermarket, a laundromat and wireless broadband access at the clubhouse café.

“I’m happy here. By renting, I get the facilities I need without having to pay the maintainance fees,” said Ms Yeo.

But her lease expires in May and should she still want to continue staying at Bayshore, it is going to cost her more than $1,500 a month — almost 50 per cent more what she is paying now.

“Prices at Bayshore Park have been fluctuating, several months ago the rental price for a two-bedroom there was at $1,500. I recently rented one out at $1,800,” said Mr Lee.

Prices at Bayshore — a typical example of a mid-market condominium — are approaching the peak of 1997, when rentals for two-bedrooms reached $2,400.

In the online classified portals, landlords are asking for rentals of between $2,000 and $2,200. On a per-square-foot (psf) basis, that translates to $2.20psf to $2.40psf.

According to Knight Frank’s real estate highlights report for the third quarter of 2006, the rental for new private residential units in the East Coast ranged between $1.65psf and $2.20psf.

But some condominiums such as Bayshore Park are doing even better. Expect to see more such rental hikes in the new year, say experts.

Source : Weekend Today - 6 Jan 2007

Republic Plaza asks for above $13 psf after clinching deal with financial firm

RENTALS at top-quality office buildings have hit an all-time high, with Republic Plaza now asking for $13 per sq ft (psf) or more a month.

Republic Plaza raised its asking price after a deal was sewn up above $12 psf in the lead-up to Christmas about a fortnight ago.

A financial institution new to Singapore is believed to have committed to about 3,000 sq ft of space there at around $12.50 psf, sources said.

This compares with the previous record level of nearly $10 psf set in 1996 for average top-grade Grade A office rents in the Central Business District.

The highest recorded rent then for an office building was $11.80 psf, said Mr Donald Han, managing director of Cushman & Wakefield.

Average rents of Grade A office space are now $8.61 psf, up two-thirds from $5.17 psf last year, according to Colliers International.

The speed of rent revisions has picked up considerably in the past few months, with landlords revising up their rentals once a deal is done, consultants said.

With sought-after office buildings enjoying almost full occupancy, any remaining space - likely to be small - can fetch premium rents, they said.

A lot of the demand is coming from financial institutions.

‘We are seeing rental commitments of as high as $12 to $13 psf in Raffles Place. However, it is limited to Grade A office buildings,’ said Knight Frank’s director of business space, Ms Agnes Tay.

One George Street, which is some distance from Raffles Place, is now commanding rentals of $9.50 to $10 psf, up from over $4 about two years ago, sources said.

Premium buildings such as 6 Battery Road and One Raffles Quay have already breached the $11 psf mark, said Mr Han.

Rents at the newest premium building One Raffles Quay, which offers large column-free floor plates, already hit $10 psf a few months back.

Overall rents have increased by almost 50 per cent since a year ago and for certain premium Grade A buildings, effective rents have doubled, Mr Han said.

For this year, consultants are projecting further increases in office rents, led by Grade A buildings, as supply will remain tight until the Marina Bay Financial Centre is ready around 2010.

However, in general, tenants are beginning to resist stratospheric rents, said Mr Han.

‘Tenants who are seeking to renew or expand this year would probably have budgeted a rent increase of 10 to 20 per cent,’ he said. ‘It’s difficult to justify to their head office that they now have to fork out much more than what was originally budgeted for.’

As a result, some tenants have moved out of Raffles Place completely while others have moved their non-core activities to suburban areas.

Some local firms have even chosen to buy their own space as their monthly mortgage payment is substantially below the high monthly rents in Raffles Place, said Mr Han.

Indeed, occupancy costs in Singapore have shot up by 65 per cent year on year, to US$7,860 (S$12,136) per workstation per year, said a statement from DTZ Debenham Tie Leung (SEA).

The rise was the highest across all 134 locations surveyed for DTZ’s global office occupancy costs report, it said.

Source : Straits Times - 3 Jan 2007

Analysts expect rents to increase by as much as 8% next year

The upward spiral of prime retail rents will continue next year, and possibly beyond.

Property consultants and analysts said that after rising 4 to 5.3 per cent this year, prime shop space rents could surge as much as 8 per cent next year as supply remains tight.

Even mega-mall VivoCity, which officially opened its doors earlier this month with 1.1 million sq ft of lettable area, did little to cool rents.

Demand has been so strong that additional space from new shopping centres and extensions to existing malls had also been soaked up. Retail complexes which increased their space included Centrepoint, which added a new wing comprising 58,000 sq ft.

CB Richard Ellis (CBRE) said its islandwide prime rental index is expected to end 4.3 per cent up in 2006, the biggest increase in five years. ‘Average prime rent in Orchard Road in the first quarter of 2006 was $33.30 per sq ft per month (psfpm). It is now $34.50 psfpm,’ said Mavis Seow, director for retail services at CBRE.

And looking ahead, retail rents are expected to grow at an even faster clip as there will hardly be any new supply of retail space coming up until 2009 - when Orchard Turn is expected to be completed, followed by the completion of two other developments in Orchard Road by developers Far East Organisation and Land Lease.

This means rental increase next year could outstrip this year’s, with estimates for 2007 ranging from 4-8 per cent.

‘For the whole of 2007, supported by the Singapore Tourism Board’s (STB) positive outlook, rental growth should remain in the region of 4-4.5 per cent,’ said Chua Yang Liang, Jones Lang LaSalle’s (JLL) head of research. Rentals should also be boosted by increased retail takings next year, as most landlords take a percentage cut of their tenants’ gross turnover, Dr Chua said. Retail sales are expected to climb next year on the back of an improving economy.

The good news for landlords - and probably not so good news for tenants - is that rents are expected to climb even past 2007. Macquarie Research, for one, expects increases of 5-8 per cent a year until 2009.

But it expects growth to slow down thereafter with new space coming onstream along Orchard Road, and when retail space in the two upcoming integrated resorts kick in. The two resorts alone will add about 1.3 million sq ft of retail space.

Other than a slowdown in rental growth, landlords will face increasing competition once all the new developments are up, said market observers. JLL’s Dr Chua said: ‘New malls will have to continually differentiate themselves from the herd. We have seen the emergence of specialised malls and this trend is set to continue.’

Other new trends to emerge would include mall owners’ increasing preference for smaller outfits over large anchor tenants, the addition of push carts and kiosks in malls, an increased food and beverage (F&B) component in shopping centres and the development of more niche F&B enclaves all over the island, said Tay Huey Ying, director for research and consultancy at Colliers International. Just in the past one year, places such as Dempsey Road, Rochester Park and Upper Thompson Road have become F&B havens.

As for shoppers, further variety can be expected, with more local and international brands making their way to Singapore.

This year, Gap, Ted Baker, Pull and Bear and a few other Spanish retailers set up shop here. Next year, besides new entrants, existing international retailers are also expected to continue extending their presence through more standalone, flagship or concept stores.

Said Macquarie property analysts Tuck Yin Soong and Elaine Cheong. ‘Given the lower retail space per capita in Singapore relative to other mature markets, we believe there is enough room for these new brands in Singapore.’

Source : Business Times - 25 Dec 2006