News Update - 10 May 2012

RESIDENTIAL MARKET

Rental yields steady in April

INVESTORS worried that the return on their residential investment properties might have taken a tumble can relax.

Rental yields held their ground last month as falling prices in the city centre and city fringe region and sustained rental demand propped up these returns.

Data from the Singapore Real Estate Exchange (SRX) found that overall yields for private non-landed homes was 4.06 per cent last month, easing slightly from the 4.23 per cent in the fourth quarter.

Suburban homes posted the best yields of 4.02 per cent, city fringe homes pulled in 4 per cent while city centre homes had the lowest yields of just 3.24 per cent.

Experts say yields are expected to hold at current levels in the short term. However, the sustained health of the rental market will depend on where the economy is headed, they add.

But if the global economy should take a sharp turn for the worse, leading to foreign workers leaving Singapore, then rental demand, and hence yields, could be aversely affected.

Yields in suburban areas could be compressed due to the upcoming supply of completed homes, even as home prices hold steady.

However, it is the opposite scenario in the city centre and city finge areas where yields may have risen as prices fall.

The rental market might face a challenging period from the second half of 2013 onwards when a bumper supply of public and private homes starts flooding the market.

Source: The Straits Times – 10 May 2012

1 Canberra receives more than 600 e-applications

AN EXECUTIVE condominium project in Yishun had received more than 600 e-applications for its 665 units by 6pm yesterday.

A spokesman for developer MCC Land said last night that the firm expects the project to be oversubscribed when e-applications close, 'once the last person leaves the showroom'. He estimated that e-applications would range from 670 to 680.

The tepid demand may be due to the intense competition among developers for first-time buyers, who are mainly responsible for oversubscription rates.

Because it's an EC, pricing is affordable, so it doesn't mean it won't do well once it's opened for all. It's still more affordable, compared to private property.

A standard three-bedroom unit will likely cost between $680,000 and $880,000 while four-bedders range from $860,000 to $970,000.

Source: The Straits Times – 10 May 2012

OFFICE MARKET

S’pore’s office vacancy rates expected to rise: CBRE

Singapore’s office vacancy rates are expected to rise further across all grades and micro markets, with a peak expected in 2013.

In the first quarter of 2012, island-wide vacancy in Singapore increased to 7.3 per cent in the first quarter of the year.

In the core central business district, which covers Raffles Place, Marina Centre, Shenton Way and Marina Bay, the vacancy rate increased to 9.3 per cent from 8.8 per cent the previous quarter.

Grade A rents have declined, falling 3.6 per cent quarter-on-quarter to S$10.60 psf/month.

The quarterly net absorption rate, a key demand indicator, stands at a positive 587,000 square feet, boosted by the high 70 per cent pre-commitment level at the Marina Bay Financial Centre Tower 3 project in March.

Strong leasing interest are coming from the energy/commodities, professional and legal sectors. Whilst rents are expected to trend slightly downwards, significant rental correction is not expected as compared to previous cycles.

Source : Channel NewsAsia – 9 May 2012