Rental rates in the private property market are poised to rise with the expected influx of some 80,000 foreign workers this year.
Analysts said this is because of the shortage of private housing. And the supply situation may not improve this year, as only 5,000 private housing units are expected for completion by the end of the year.
The Government’s forecast on the number of foreign workers here comes on the heels of an expected boom in the job market. And as housing needs for these foreign workers increase, rental rates are likely to follow.
Mr Nicholas Mak, executive director of research and consultancy at SLP International, said: “(The influx) would actually still support the rental market in Singapore. And this could cause rentals to rise anywhere from 2 to 5 per cent for the second half of this year.”
Second quarter figures from the Urban Redevelopment Authority showed private property vacancy rates were at 5.4 per cent.
Analysts added that private residential property rental yields are currently 3 to 4 per cent. With the rise in foreign workers, they expect rental yields for non-landed properties to increase by about 1 per cent by the end of this year.
“With the inflow of foreign workers into Singapore, we expect rental yields to probably be at a steady level because of the rent take-up,” said Mr Eugene Lim, associate director of ERA Asia Pacific.
“Typically, the rental market in Singapore is pretty stable. It will only drop, for example, in times when the economy is undergoing recession. That is when big numbers of foreign workers may then leave the country,” said Mr Lim.
Source : Today – 20 Sep 2010