En bloc units being rented out at half price

Here’s good news if you are looking for a place to rent. Property developers are renting out en bloc units at half the usual price.

Many new property projects have been put on hold due to the economic uncertainty.

In the meantime, developers are renting out the existing units, acquired over the last two years, to cover their costs.

Mark Teo, ERA’s senior group division director (real estate), said: “These holding costs are tremendous, because projects like these, some of them are worth a few hundred million to maybe close to a billion dollars.

“So they would just have to perhaps rent them out to collect as much as they can in terms of rental.”

But to do so, some developers may have to do some touch-up work.

Mr Teo said: “These so-called en bloc projects, they’re pretty old – perhaps more than 20 or 30 years old – and coupled with the fact that usually the owners did not do too much to maintain the houses, so the conditions of these en bloc developments are actually quite poor.

“So in order to be able to attract tenants, developers may have to repaint or do some maintenance to the houses.

“On top of these, generally the rental would have to be lower. I’ve seen some of these asking for even 50% below the usual rents.”

Analysts say that given the right price and location, some developers can expect to see all the units they hold fully rented out.

But most developers are generally satisfied with just renting out at least one third of the entire project.

And it will be a tenants’ market with overall rents expected to fall, as some 30,000 brand new units will come onstream over the next two years.

Analysts say that most of these have been bought by investors intending to rent them out.

Source : Channel NewsAsia – 1 Feb 2009

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