Saturday, July 7, 2012

» Yields for private homes sag in Q2

Business Times: Sat, Jul 07

[Singapore]  RENTAL yields for non-landed private homes fell across all regions in the second quarter of 2012, data compiled by the Singapore Real Estate Exchange (SRX) showed.

In particular, rental yields for homes in the core central region (CCR) took the biggest hit, sliding 6.4 per cent to 3.2 per cent in Q2 from 3.42 per cent in the previous quarter.

Other non-landed units in the rest of the island also experienced declining yields.

Homes in the rest of central region (RCR) and outside central region (OCR) recorded yields of 4.02 per cent and 3.99 per cent, down 2.7 per cent and 5.2 per cent respectively from the previous quarter, dragging down overall non-landed private home yields by 5.9 per cent to 4.01 per cent.

Actual physical rents remained generally flat across all segments, though homes in the CCR registered the sharpest decline.

Commenting on physical rents in prime districts, Alan Cheong, director of Savills Research, said: "The rents of high-end, non-landed residential properties tracked by Savills showed a four-month consecutive fall. The average monthly rent dipped to $5.03 psf per month in the second quarter of 2012, sliding 3 per cent quarter on quarter. On a year-on-year basis, prime rents fell by 8 per cent from $5.46 psf per month in the second quarter of 2011."

The volume of rental transactions for non-landed private homes also tumbled across all regions to 7,198 transactions in Q2, from 7,498 in the period before, according to data from SRX, which represents about three-quarters of Singapore's private rental market.

Industry watchers expect leasing demand for higher-end private homes to slow in the coming quarter as rental budgets for expatriates are tightened amid global economic uncertainty.

But some home segments may benefit from the budget cuts.

Said Savills' Mr Cheong: "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, island-wide median rents may increase marginally by up to 5 per cent by the end of the year."

That said, Mr Cheong expects an overall softening in residential leasing demand here after a peak sometime towards the end of Q2 to the middle of Q3 stemming from job losses in the banking and financial sector.

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