Saturday, March 2, 2013

Suburban flat rents on the rise

Mass market units in east, north-east are top performers

The Straits Times  |  Mar 02, 2013

Mass market apartments in the east and north-east part of the island were the star performers on the rental front in the fourth quarter last year.

Median monthly rents rose 2.9 per cent to $3.13 per sq ft (psf) in the three months to Dec 31, according to Savills Singapore yesterday.

Apartments in western areas such as Jurong managed rental increases of 2 per cent to $2.96 psf while suburbs in the north such as Woodlands saw a 1 per cent dip to $2.72 psf.

Over a longer period, homes in the west posted the strongest quarterly average rental growth of 2.2 per cent since the second quarter of 2010.

This is a touch higher than the 2.1 per cent average lodged by homes in the east and north-east and the 2 per cent by homes in the northern part of the island.

Experts say homes close to international schools and MRT stations are doing better with tenants.

But they point out that suburban rents are also rising as there is an increasing number of smaller-sized homes being built. Smaller units tend to be priced higher on a psf basis.

Savills Singapore research head Alan Cheong says that rents on a psf basis are expected to keep climbing in the short term due to this trend, rather than a strong increase in demand.

The tighter immigration policy tends to affect mostly people who rent HDB flats or live in workers' dormitories. New immigrants are likely to be professionals, managers, executives and technicians with a family or singles who will go into the suburban segment rather than the higher-end rental segments, Mr Cheong notes. This will provide a level of support to mass market rents.

"What we have been witnessing is that most have a budget of $2,500 to less than $4,000 per month, which means they will be funnelling to suburban shoeboxes or... three-bedroom apartments," he says.

Older three-bedroom units are typically about 1,000 sq ft. New flats coming on stream tend to be smaller but tenants would pay the same rent because of the newness factor, he adds.

Analysis by Square Foot Research found that median overall rents in suburban areas such as District 28 - which comprises Seletar and Yio Chu Kang - have been rising. Median rents for flats there rose 3 per cent to $3,200 a month in the fourth quarter from $3,100 in the previous three-month period.

Landlords also enjoyed rental gains in District 21, which includes Clementi and Upper Bukit Timah, and District 19, home to Hougang, Punggol and Sengkang. Median monthly rents in the fourth quarter last year were $3,450 in District 21, up from $3,400 in the third quarter. They averaged $3,400 in District 19, up from $3,350 in the previous three months.

Yishun Emerald was the top-yielding suburban project in the fourth quarter, Square Foot's research showed.

Completed in 2002, the 436-unit development had an average sale price of $697 psf and a median rent of $2.92 psf per month. This works out to a gross rental yield of 5 per cent. A three-bedroom unit of between 1,100 and 1,200 sq ft fetched a monthly rent of $3,600 in a lease inked in January.

Other high-return projects included Rivervale Crest in Sengkang, which had a rental yield of 4.6 per cent.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C

Senior Sales Director
DTZ Property Network Pte Ltd (L3007960A)

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