Tuesday, August 28, 2012

Residential leasing volume rose significantly in July

Leasing volume for residential properties increased substantially by 11 percent month-on-month to 4,717 in July this year, according to recent data from the Urban Redevelopment Authority (URA).

Leasing transactions for both non-landed and landed homes increased by 11 percent over the same period, reflecting equally strong demand for both segments.

However, total leasing volume dipped 0.7 percent year-on-year, nearly hitting the same level recorded last year. For the first seven months of 2012, total transactions reached 27,932 units, up five percent from last year.

In terms of rents, July recorded historical highs of S$2.81 psf per month for landed homes and S$3.60 psf per month for non-landed homes. On a year-on-year basis, median rents for landed homes rose two percent while non-landed homes climbed seven percent.

“Although new incoming expatriates appear to have more constrained rental budgets these days, we would nevertheless expect rents, as measured on the S$psf basis to increase as the new incomers lean towards the smaller format homes or landed properties where the absolute quantum paid is lower,” said Alan Cheong, Research Head at Savills Singapore.

Moreover, transaction values peaked at a historical high of S$24.5 million in July, a 0.5 percent increase year-on-year. For the first seven months of this year, total transaction value stood at S$136.98 million, or eight percent more than last year’s S$126.44 million.

Moving forward, leasing transactions are expected to “drop over July’s numbers, but nonetheless, when measured on a year-to-year basis, would at least hold firm or even sporadically rise for a month or two”.

Cheong also noted that the on-going Eurozone crisis is expected to push new leases to remain high or “even exceed 2011’s numbers”.

“However, the rental quantum payable is expected to fall. At the moment, we are not yet witnessing the completion of the bulk of small format homes sold from 2010 onwards, and this has the effect of keeping the rental indices up.”

But if more homes are completed from next year and “if the Eurozone situation does not improve, rents may see an inflexion point,” he added.

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