As properties that were recently sold en bloc were returned on the rental market for lease, nearly 1,000 projected new apartments from Singapore’s property market are expected to be withdrawn.
Lucky Tower at Grange Road is the latest example of this, which the City Developments Ltd (CDL) purchased in May 2006. It was supposed to be redeveloped into a condominium with 178 units, based on the compiled data of Savills Singapore. However, redevelopment was pushed back.
The Grangeford at Leonie Hill with 192 units, another development which the OUE acquired in 2007, was also returned on the market to be put on lease. It defers development because according to Thio Gim Hock, executive director of Lippo Realty, “The market does not look good for this year or the next.”
The Pin Tjoe Court was also started to be leased out by the Pontiac Land Group. It was acquired in September 2006. According to William Teh, the residential leasing senior vice-president, they are expecting to redevelop by next year. In the meantime, “…we are offering very short-term leases, and this is not representative of typical rental in the market.”
Fairways Condominium, Furama Towers, Lincoln Lodge, Sophia Court, and Flamingo Valley are other en bloc developments that are put on lease on the rental market.
It is expected that the rising number of returned en bloc sites on the rental market will further depress the already waning rentals. Japanese investment house Nomura refers to this as the “hidden leasing supply”. Nomura said, “The move by developers to return en bloc units back to the leasing market to cover to a degree of the holding costs is not unanticipated.”
Rentals are already anticipated to decline anyway, regardless of the “hidden leasing supply”. Still, Nicholas Mak, consultancy and research director of Knight Frank, suggests that the leasing units’ ‘hidden supply’ will not make a dip on the rental market. A lot of these en bloc developments are already in a state of disrepair, he noted.