Saturday, July 7, 2012

» Non-landed private resale deals surge

Straits Times: Sat, Jul 07

IN A POSSIBLE red flag to investors, while more non-landed private resale homes were sold in the second quarter, the number of leases inked fell, new figures show.

Singapore Real Estate Exchange (SRX) data found that 3,450 resale transactions were closed - the market's best showing in the past year.

Resale volumes shot up 64 per cent from the 2,108 units sold in the sluggish previous quarter.

Experts say higher prices at new project launches have diverted buyers back to the resale market.

For instance, projects such as Sky Habitat in Bishan and Katong Regency in Paya Lebar, both launched in April, set new price records for their areas.

Average prices for resale homes in the city centre also rose 5.4 per cent to $1,724 per sq ft, eclipsing prices in the previous three months, and are at their highest ever.

SRX collates and displays transactions by major property agencies, accounting for about 85 per cent of resale transactions.

The non-landed private rental front, however, saw a more subdued performance. The number of rental contracts inked dipped 4 per cent to 7,198 leases in the three months to June compared with the previous quarter's figure.

Gross rental yields also declined across the board. Overall yields came in at 4.01 per cent in the second quarter, down from 4.26 per cent in the same period last year.

City centre homes posted the lowest yields of 3.2 per cent, followed by suburban homes with 3.99 per cent. City fringe homes were tops at 4.02 per cent.

Experts say demand and rents of high-end homes have taken a hit as corporations cut back on spending.

Prime rents have fallen 8 per cent since a year ago, Savills said.

Still, some high-end leases have been closed in the period. For instance, a unit at One Devonshire was let for $16,000 a month.

Real estate investor Sameer Aswani, 36, said high-end apartments of smaller sizes are easy to rent.

Bigger luxury apartments, however, are seeing less interest from tenants, although rents are just tapering down slightly.

While Mr Aswani has managed to increase rents for his smaller units at The Sail, he has heard that a penthouse unit at the same project had to have its rent cut to secure a tenant. 'Location plays a big part. Rents at Marina Bay are climbing as the place is maturing into a business district together with a lifestyle element. The Orchard area might face a tougher time as it offers only lifestyle,' he said.

Savills Singapore research head Alan Cheong said: 'The demand for small-format homes and suburban homes is expected to rise as rental budgets diminish. Owing to increasingly greater completions and the leasing out of these small-format units, islandwide median rents may increase marginally by up to 5 per cent by the end of the year.'

C&H Properties key executive officer Albert Lu noted that while yields for high-end homes have dipped due to falling rents, yields of suburban homes have decreased due to fast-rising prices even as rents hold firm.

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