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Falling Rentals, the Next Hotspots and the Current Property Market

If you are an investor, or just a curious soul, you may have a need to look from the third person perspective how is the current situation on a subject.

You may not have a vested interest, or you may have, you just want to answer the question whether are things really different from the main story line.

That is my view of the Singapore property market. I am not invested, but as a person born here, earning a wage here, the strength and future of this country, not to mention my livelihood matters.

Property Soul over at her site put out a piece aggregating some collective thoughts on some questions that are on the minds of property investors or prospective property investors.

Particularly, she doesn’t gather some wannabes but some of the investors, who have vested interests in this market in a big way. When reading, keep in mind that their potential investments are likely those that are less affordable for the upper middle class.

On the current rental market:

“Mine are 30 to 50 percent. One of my properties the rent drops from $18,000 to $10,000,” echoed Investor H.

“When I see more young expatriates and more foreigners coming to Singapore without their families. I do room rental instead of leasing the whole unit. That property has 20 to 30 percent increase in yield,” added Investor D.

On the Singapore housing market:

Many millennials (with about one million in Singapore) prefer renting to buying.

“Not only foreigners are renting. Some locals are renting too. They are waiting for prices to bottom out. The URA data has been showing a healthy leasing volume.”

There are currently over 21,000 unsold units. Given buyers can clear about 7,000 homes a year, it will take at least three years for the market to absorb all the unsold units.

On the cooling measures:

“The government wants to see market correction because many Singaporeans are unhappy about the rise of property prices over the last couple of years.” Investor D shared her views about the Singapore property market.

“But on the other hand, the government do not want to see the property market crash because that shows the government manages housing badly in this country,” commented Investor D.

What the rich are doing with their money:

Banker D echoed with Tay, “A lot of investors are keeping the powder dry. There’s a lot liquidity just waiting for what they think could be the right moment. They are still hunting. You see people going to the showflats but they are not signing the cheque yet.”

“Many are buying overseas. Foreign properties can give you much better yield. Most properties in Singapore today is 2 to 2.5 percent,” said investor K. “But you must have high appetite for risk when buying overseas. Anything can happen.”

Where are the next hotspots:

Tan noticed that industrial properties sold in the heydays of 2012 and 2013 which agents promised an attractive rent of $3 psf, they now can’t even rent out at $2 psf. In general, the rents are falling.

Investor E warned that some of these areas have rental problems and high vacancy rate. Empty strata title shops in Alexandra Central is a good example.

A short but good digest. There are more from where this comes from head over to her  site at Property Soul on the 5 things that everyone wants to know to find out.

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Monday 24th of October 2016

Unsold units has certain dependency on migration. I think sg has allowed 100K migrants each year before. Another will be what is the right level of unsold units per year ?


Wednesday 26th of October 2016

Hi Cory, thanks for coming. there are conflicting reports in that the demand is enough to fill the supply. yet estimations such as this shows the demand to be weak such that we might have ample supply left over.

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