Vacancies in the private residential
market are set to inch up over the next few years as a supply glut looms, and
this would exert downward pressure on rents and, hence, investment returns.
ANZ Bank flagged in a report on Friday
that Singapore
Daniel Wilson, economist for Asean and
Pacific at ANZ Bank, said that he expects non-landed property rents to fall
cumulatively by up to 10% by the end of next year, given the time lag between
changes in vacancies and rents.
Rising interest rates pose a second
headwind, he added, warning that a potential 100-basis point hike in interest
rates next year could trigger a sharper fall in rents.
Vacancy rates in the first three
quarters of this year have already outpaced the bank's expectations.
Data from the Urban Redevelopment
Authority (URA) showed that private residential rents sank by a deeper 0.8% in
the third quarter, after a 0.6% decline in the preceding quarter; the data
showed overall private home prices slipped 0.7% in the third quarter.
The vacancy rate of private homes rose
to 7.1% in the second and third quarters, the first since 2006 that it has
exceeded 7%, with the vacancy rate for non-landed private homes already
exceeding 8% in the second and third quarters.
Mr. Wilson said that a vacancy rate of
7.5 - 8.5% is deemed the tipping point at which "intensified downward
pressure on property rents manifests itself". But the overall vacancy rate
for private homes could rise to a higher 8.5 - 9.0% over the next two years, he
projected.
"Though the supply pipeline is
well-anticipated, its impact has not been tested," he said.
About 80,000 units are in the supply
pipeline - including units under construction and planned development - way
above the long-term average of about 60,000 units. Some 80% of these units are
already under construction and many will be hitting the market over the next
few years, according to Mr. Wilson.
URA's third quarter statistics showed
that some 20,852 private condos and executive condos will be completed in 2014,
significantly higher than the 13,150 units completed in 2013. Another 23,769
units are expected to be completed next year.
ANZ expects new completions of private
condos to peak in 2016, nearly 2.5 times the long-term average.
Even by assuming that the population
size of Singapore
Source:
BT
The
wife and I tried to obtain a copy of the ANZ research report from their website
but unfortunately this is only available to their institutional clients, which
we are not.
So
if anyone can get us a copy to post here, it will be most appreciated.
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