Rents in Singapore's prime residential sector are expected to ease further. Consultancy firm Jones Lang LaSalle has projected a 4.5 per cent contraction for the whole year. The sector has already weakened by two per cent year to date.
In its mid-year review on the Singapore property market, Jones Lang LaSalle also noted an easing in the resale prices of luxury projects in the prime districts.
However, it said that mass market homes saw healthy growth of some three per cent. High rentals are forcing expatriates on lower housing budgets to move out of the prime market in Singapore and this is behind softening rents this year. This is expected to persist into 2009, when more housing units will likely enter the market.
An anticipated 15,000 units are expected to be completed by the end of 2009, compared to an average take up of 6,800 units per annum.
According to Jones Lang LaSalle, what may help prop up rentals is demand. It noted that companies in Singapore are still expanding, going by the take-up in office space.
Christopher Fossick, Managing Director, Singapore & Southeast Asia, Jones Lang LaSelle, said: "There is still an influx of people coming here to work and there is a strong expatriate demand in all business sectors."
Meanwhile, in the resale market, the average prices of units in the prime districts eased by some 4.9 per cent in the first half of this year.
However, this may change. Collective sales have been a key source of land for new projects in the prime areas and with these drying up, home prices may be pushed upwards.
Mr Fossick continued: "There's been almost no residential collective sales this year. Volume has gone down 97 per cent by our records in the first half versus the first half in 2007. In 12 to 24 months’ time, we're going to see that impacting the market. There's also far less supply from luxury collective sales sources."
Over in the mass market, prices have been holding up, climbing by some three per cent in the first half of 2008 due to demand from dislodged collective sale owners and those upgrading from government flats. - CNA/vm
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