Prime residential rents could fall 4.5% by year end

July 18, 2008
Prime residential rents could fall 4.5% by year end
By Nicholas Fang

RESIDENTIAL rents in Singapore's prime districts could drop by 4.5
per cent by year end, amid fears of a longer-than-expected downturn
in the United States.

Property consultant Jones Lang LaSalle (JLL) said the high rentals
seen in the Republic's prime districts last year are now facing
downward pressure.

Prime properties are typically located in districts nine to 11 with
units ranging in size from 500 to 2,000 sq ft.

JLL South-east Asia and Singapore managing director Chris Fossick
said in a press conference yesterday: 'Expatriates with lower housing
budgets are moving out to the non-prime market, causing typical prime
rentals to ease marginally in the first half of this year.'

According to JLL, luxury prime property rentals softened by 1 per
cent in the year-to-date while typical prime rents weakened by 2 per
cent.

Said JLL: 'With the US economy facing the potential of a longer
downturn than expected due to the sub-prime woes, credit crunch and
rising inflation, market sentiments continue to weaken in Singapore.

'The level of residential collective sales has dropped to only two
transactions worth $55.3 million in the first half of the year
compared with51 transactions worth some $9.33 billion over the same
period last year.'

JLL forecasts that average resale prices in the central district are
expected to ease about 1 per cent year-on-year by next year while
mass-market resale prices will most likely maintain current levels.

Meanwhile, prices in the luxury prime market are expected to contract
the most, falling some 11 to 13 per cent year-on-year next year.

However, Mr Fossick believes that once the US housing crisis passes,
a recovery in this region will be swift given the sentiment-driven
nature of the industry.

'The uncertainty in the US is unlikely to clear up in the next six
months, but if things begin to look up after that, we could see a
rapid turnaround here as soon as early next year.'