Rentals spiking towards 1997 peak

While the euphoria and hype of the high-end residential property market have yet to filter down to the mass and mid-market segment, where home prices are still in the doldrums, it is a happier situation in the rental market.

Rents for private residential apartments across the board are edging towards their 1997 peak, say experts.

“Rentals are picking up quite a lot — by 8 per cent to 10 per cent on average — much higher than sale prices. We’re seeing a lot of foreigners and this is what is boosting the market. They are only 10 per cent to 20 per cent below the peak,” said Mr James Lee, founder and chief executive of James Lee Realty.

In comparison, prices of mid and mass- market private condominiums are still between 30 per cent and 40 per cent below the peak. The spike in rentals is not confined to the private sector; even Housing Board flat rentals are seeing a rise.

In some prime areas, rents have gone up by 20 per cent while rents for HDB flats in suburban areas like Jurong have gone up by about 10 per cent according to anecdotal evidence, say market watchers.

For example, said Mr Lee, a month ago his agency secured a lease for a two-bedroom apartment in Spring Dale condominium at Upper Bukit Timah for $1,800 per month. The earlier rental which expired in October was $1,400 per month.

The rise has been even steeper in prime areas like Balmoral Road in District 10. “A three bedroom unit used to be signed on for $6,000 a month two years ago. Last month, we rented one out for $8,500,” said Mr Lee.

He reckons rentals have jumped by about 20 per cent in the last 18 months and are set to go even higher.

In the mid-market segment, too, rentals are beginning to go beyond the reach of young professionals.

Ms Hena Yeo, a young professional renting a studio apartment in Bayshore Park, snagged a good deal in mid-2005 when she rented a 624-square foot apartment for $1,050 a month.

It was a bargain, considering the locale. For her money, Ms Yeo is getting the works, with full condominium facilities as well as the added bonus of Bus Plus service to the financial district, a small supermarket, a laundromat and wireless broadband access at the clubhouse café.

“I’m happy here. By renting, I get the facilities I need without having to pay the maintainance fees,” said Ms Yeo.

But her lease expires in May and should she still want to continue staying at Bayshore, it is going to cost her more than $1,500 a month — almost 50 per cent more what she is paying now.

“Prices at Bayshore Park have been fluctuating, several months ago the rental price for a two-bedroom there was at $1,500. I recently rented one out at $1,800,” said Mr Lee.

Prices at Bayshore — a typical example of a mid-market condominium — are approaching the peak of 1997, when rentals for two-bedrooms reached $2,400.

In the online classified portals, landlords are asking for rentals of between $2,000 and $2,200. On a per-square-foot (psf) basis, that translates to $2.20psf to $2.40psf.

According to Knight Frank’s real estate highlights report for the third quarter of 2006, the rental for new private residential units in the East Coast ranged between $1.65psf and $2.20psf.

But some condominiums such as Bayshore Park are doing even better. Expect to see more such rental hikes in the new year, say experts.

Source: TODAY, 06 January 2007

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