Shedding light on the rental market
By Feily Sofian
/ The Edge Property |
Halloween is not over yet in the residential rental market. According to the latest statistics released by the URA on Oct 28, rental decline for private non-landed homes accelerated to 1.4% q-o-q in 3Q, after slipping just 0.4% in 2Q. On a y-o-y basis, rents dipped by 4%.
The mass market, or Outside Central Region, was the worst performer as rents declined 2.4% q-o-q and 6.5% y-o-y in 3Q. A micro-market analysis also shed light on other trends.
Stiff competition from new supply has taken a toll on rents of existing condos in Pasir Ris
Under supply pressure, condominiums in Pasir Ris were among those that took the biggest hit in rents. A total of 2,408 private non-landed homes were completed in Pasir Ris over the past year, the highest among the 38 planning areas featured by the URA. Hougang came in second with 2,255 units.
As a result, some existing developments in Pasir Ris suffered a double-digit y-o-y decline in rents. Monthly rents for two-bedroom units at Carissa Park Condominium, Edelweiss Park Condominium, Ferraria Park Condominium and Loyang Valley, for example, dipped between 11% and 17% y-o-y in 3Q2016.
Newer developments were not spared. At NV Residences, a 642-unit condo completed in 2013, monthly rents for two-bedroom units plunged by about $400, or 16% y-o-y, from $2,710 in 3Q2015 to $2,268 in 3Q2016. Those at Livia, a 724-unit condo completed in 2011, fell 11% from $2,850 to $2,530 over the same period.
Pockets of dark units reflect significant vacancy rates at existing condos in Pasir Ris
When The Edge Property visited some of these projects on a weekday after 8pm, pockets of dark units flagged significant vacancy rates.
Major new supply in Pasir Ris over the past year include Parc Olympia (486 units), Ripple Bay (679 units), The Inflora (396 units) and The Palette (892 units). The latest project that came on-stream was Stratum on Elias Road, with 380 units.
On a brighter note, occupancy rates at newly completed projects such as Ripple Bay and The Palette were visibly higher, judging from their share of lit units.
Bedok is another area in the East Region where a few condos booked hefty rental loss. Monthly rents for two-bedroom units at Eastern Lagoon fell 11% from $2,731 in 3Q2015 to $2,441 in 3Q2016. Similarly, those at Optima @ Tanah Merah declined by 11% from $3,352 to $2,991 over the same period. Meanwhile, monthly rents for two-bedroom units at Casa Merah were down 9% from $3,408 to $3,100.
Several projects in Bedok and North-East Region also sustained a double-digit y-o-y decline in rents
Separately, several projects in the North-East Region, which includes Serangoon, Hougang and Sengkang, also sustained a double-digit y-o-y decline in rents. Two-bedroom rents at Kovan Melody, for example, dipped 13% from $3,218 per month in 3Q2015 to $2,806 in 3Q2016.
At Compass Heights in Sengkang, monthly rents for two-bedroom units dove 18% from $2,971 to $2,425 over the same period, while those for three-bedroom units were down 12% from $3,189 to $2,820.
Major projects in the North-East Region that were completed in the past year include FLO Residence (530 units), Jewel @ Buangkok (616 units), Kovan Regency (393 units), La Fiesta (810 units), Midtown Residences (160 units), Parc Centros (618 units) and Riversails (920 units).
Occupancy rates at newly completed projects such as Ripple Bay and The Palette were
visibly higher
Older condos in Central Region bear the brunt
Private non-landed rents in the Central Region have shown more resilience than those in the mass market. In the Core Central Region, also known as the high-end segment, rents were down 1.4% q-o-q and 3.3% y-o-y in 3Q. Those in Rest of Central Region, or the city fringe, slipped 0.6% q-o-q and 3.4% y-o-y in 3Q.
Since their last peaks, rents for private non-landed homes have declined by 14% in the mass market, 11% in the high-end segment and 7.2% in the city fringe.
Occupancy rates in Eight Riversuites, an 862-unit condo that was completed in 1Q2016, look encouraging. The project is located in the city fringe, about 400m from the Boon Keng MRT station. It has close to 190 one-bedroom units and to date, there have been 137 rental contracts for these. Monthly rents averaged $2,279 and $2,717 for the one- and two-bedroom units respectively in 3Q.
Completed in 1Q, a good share of the units at Eight Riversuites were lit up
Anecdotal evidence shows that older condos saw a big dent in rents, despite their central locations. Condos that saw double-digit y-o-y declines in two-bedroom rentals include Allsworth Park on Holland Road, Costa Rhu in Kallang, Emerald Park in Bukit Merah, Kim Sia Court near Mount Elizabeth Orchard and Pandan Valley.
In Allsworth Park, for example, monthly rents for two-bedroom units were down by $415, or 13% y-o-y, from $3,171 in 3Q2015 to $2,756 in 3Q2016. Those for three-bedroom units fell by almost $600, or 11% y-o-y from $5,210 to $4,628 over the same period. Allsworth Park is a 999-year leasehold condo that was completed in 1985.
Supply hot spots
According to the URA, 42,379 private non-landed homes are expected to be completed over the next five years.
In the high-end segment and city fringe, Downtown Core occupies the top spot in terms of pipeline supply, with 3,253 units that are being planned or under construction. Bukit Merah came in second with 2,964 units, followed by Geylang, with 2,592.
Despite the recent supply influx, Pasir Ris takes second position with the highest pipeline supply in the mass market. An estimated 2,748 units are being planned or under construction in the area. Bedok tops the chart with 3,150 units, while Sengkang ranks third with 2,440 units.
Bedok, Pasir Ris and Sengkang hold the highest pipeline supply in the mass market
Shoebox woes
Rents for one-bedders, including shoebox units, trended down at a relatively steep pace of 5.4% y-o-y in 3Q. Mass-market and city-fringe projects led the decline as rents fell 7.4% and 6% respectively (see table).
In the mass market, a few projects in Bedok and Serangoon witnessed hefty rental declines for their one-bedroom units. At Kembangan Suites, for example, one-bedroom rents dipped 11% y-o-y from $2,614 in 3Q2015 to $2,314 in 3Q2016. Over in Serangoon, one-bedroom rents at Casa Cambio were down 9% y-o-y from $2,083 to $1,889 over the same period.
With less competition from new and HDB projects, one-bedroom rents in the high-end segment were more resilient, falling 4.3% y-o-y from $3,259 per month in 3Q2015 to $3,120 in 3Q2016. Using new sales caveats from 2013 onwards for units measuring 70 sq m or less as a proxy, there are about 17,000 one-bedroom units island-wide in the pipeline.
Sengkang has the highest pipeline supply with 1,652 units. Other areas with more than 1,000 one-bedroom units in the pipeline include Geylang, Hougang, Toa Payoh, Pasir Ris, Bedok and Serangoon.
This article appeared in The Edge Property Pullout, Issue 753 (Nov 7, 2016) of The Edge Singapore.
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