(C) Rents across all property sectors continue upward trend
The larger economy continues to provide the critical factor in the rental market. As it is, the Singapore economic fundamentals are intact and this could be seen from the healthy performance of the rental markets, though there were signs showing that residential rents may ease off from the middle of this year onwards due to the higher supply expected from the new projects receiving their TOP [Explanation of TOP at Annex A].
- (C.1) Singapore residential rentals 5th highest in Asia
According to a recent survey by ECA International, Singapore’s residential rental rates for a three-bedroom apartment is the fifth most expensive rent in Asia and ninth globally. The residential rents have increased by 33% over a year - from 2006 to 2007 – also the largest increase in Asia.
The survey finding attributes the steep rise to rising demand and limited supply as companies are expanding their operations in Singapore together with government initiatives to attract skilled workers from overseas.
But at the same time, the supply of property available has been limited by a number of factors such as en bloc purchases by developers, which have exacerbated the situation. In addition, the exchange-rate fluctuations also make a difference. Rental prices have gone up as the Singdollar has strengthened against the US dollar in recent months.
Table [ 10 ] - Six of the top 10 most expensive locations in the world are in Asia
| 1st |
Hong Kong |
6th |
Mumbai |
2nd |
Moscow |
7th |
Seoul |
3rd |
New York |
8th |
Caracas |
4th |
Tokyo |
9th |
Singapore |
5th |
London |
10th |
Ho Chi Minh City |
Average rental prices in Asia are around US$3,820, the global average is about US$2,950.
- (C.2) Rentals of Singapore private homes rose 6.0% in 1Q 2008
Rentals of private homes rose 6.0% in the first quarter this year, compared with the 6.8% increase in the previous quarter. The table below shows the rental growth of private homes quarter-on-quarter:
Table [ 11 ] – Rental growth across the island quarter-on-quarter
Regions |
1Q08 |
4Q07 |
Core Central Region (CCR) |
4.8% |
5.3% |
Rest of Central Region (RCR) |
6.7% |
8.8% |
Outside Central Region (OCR) |
8.4% |
8.5% |
All Residential |
6.0% |
6.8% |
The detailed breakdown of rental for different private home types is as follow:
Table [ 12 ] – Rental growth of different house types quarter-on-quarter
House types |
1Q08 |
4Q07 |
Detached houses |
3.6% |
7.3% |
Semi-detached |
8.6% |
7.1% |
Terrace houses |
8.7% |
7.1% |
Non-landed property |
5.9% |
6.7% |
- (C.3) Flatted factory rents boosted by office space crunch
Since the third quarter of last year, the light industrial factory segment has begun to experience some of the spill-over effects of the office space crunch.
Monthly gross rents of prime conventional flatted factories in central Singapore for the first quarter of 2008 increased by 11.8% for ground floor space and 10.6% for upper floor space on a quarter-on-quarter (QoQ) basis to $2.36 psf and $1.77 psf respectively.
Some of the demands are likely to come from the service industries including design agencies, IT-related support firms, and engineering firms and demand for such space was so high that newer and more modern flatted factories such as Cendex Centre and E-Centre commanded average monthly gross rents of $3.20-$4 psf in the first quarter of 2008.
For the rest of the year, rents for conventional factories could go up by some 10% to 15%; whilst rents for high-specification industrial space and business park space will rise up to 20% for the rest of the year due to the spill-over demand from the office sector.
Average monthly gross rents for high-specification industrial space rose 16% in the first quarter of 2008 to $3.98 psf with popular space in Alexandra Road and Changi Business Park commanding average monthly gross rentals of around $4.80 psf.
Strong demand for logistics space from third party logistics service providers and industrialists also saw average monthly gross rents of prime warehouse space rising 13% for ground floor space and 7.5% for upper floor space in the first quarter of 2008 to $2.35 psf and $1.72 psf respectively.
- (C.4) Office property prices edge up by just 1.1% in 1Q
Office property prices showed signs relenting in the first quarter of 2008, with foreign investors either withdrawing from the market or demanding lower prices.
The Urban Redevelopment Authority (URA) reported that office property prices grew a marginal 1.1% in the first quarter of 2008, compared with an 8% increase in the previous quarter.
The office sector has been hurt by the global credit crunch, and the worries over impending new supply post-2010.
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