Rents of high-end homes in Singapore will likely fall further, on the back of healthy supply and less generous packages for expats.
Jack Teo, Associate Agency Head of GPS Alliance, said luxury home rents have dropped by two percent in six months. He noted that some of his clients have had to slash rents by as much as seven percent to attract tenants.
High-end projects such as Cliveden at Grange, The Orange Grove and The Orchard Residences have recently been completed, adding to the number of units being offered on the market.
Meanwhile, some property agents said landlords asking for a rent of S$10,000 a month are having difficulty finding tenants. Pressure on rents is also seen in some cost-conscious firms that apply local terms for expats. This means they must now pay for rent from their salaries instead of enjoying a separate housing allowance.
“Multinational corporations have lower budgets now so there’s no longer a separate housing package. And when a tenant has to budget out of his pocket, he is usually more sensitive to price and tends to want to spend less,” said Teo, who is also a property agent.
The quieter property market can also be attributed to a seasonal drop, as expats typically look for homes between May and June before the school term in August.
Markus Tay from Luxe Group said it takes two to five months to find a tenant for luxury homes today, about 30 percent more time than six months ago.
He noted that the high-end market will likely rebound next year, once the number of completions starts to slow and the segment stabilises.
Some property experts noted that high-end homes are commonly owned by wealthy individuals who see their purchases as a form of wealth preservation and investment, thus they are less concerned about achieving high rental yields.
Rental yields for prime areas are among the lowest in Singapore. In a report by Kim Eng, rental yields in Orchard Road were just 2.8 percent, while Sentosa and Newton offered 2.6 percent and 2.4 percent respectively. Suburban rental yields, on the other hand, were as high at 4.1 percent, with Sengkang, the most attractive estate in the rental market, at 4.8 percent.
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