Rental rates for residential units surge

Rental rates for residential units in Singapore have tracked the increase in private property prices, with rentals for condos posting a significant increase of 5.8 percent within the first five months of 2010.

According to data presented by URA, median rentals of non-landed residential properties amounted to $30.54 psm in January but increased to $32.41 psm two months ago.

Rentals in the central region are even higher at $36.89 psm during the same month.

Maximum rents per month for non-landed residential properties in the central region hit $114.58 psm, while minimum rental per month is $11.64 psm.

Condos in the east and west recorded an average rent of $27 psm and $27.68 psm for the same period, while rentals in the north-east region stand at $26.39 psm and north region rentals hit $24.47 psm.

As for the rest of Singapore, maximum rentals range from $33.65 psm to $60.87 psm, while minimum rentals range between $10.18 psm and $14.36 psm.

Several market watchers said the significant increase in residential rentals is largely attributed to the improving economy and a robust real estate market.

Donald Han, Cushman and Wakefield’s managing director, attributed the increase to landlords looking to pocket high returns from the bullish growth by increasing rents.

"Businesses have started to relocate to Singapore and are bringing in a lot of foreign workers, which have increased demand for residential housing, as compared to the first half of last year, when companies were shedding staff," he said.

But Mr. Colin Tan, Chesterton Suntec International‘s head of research and consultancy, explained that the rental increase is due to a sharp drop in housing supply.

During the fourth quarter of 2009, the number of demolitions increased to 1,441 – over the 1,400 units available.

He attributes this to an increased number of collective sales, which resulted in more properties being demolished during that period.