Prime residential rents up in Q3

Singapore’s prime residential rents have been boosted by new supply during the third quarter, with average prime non-landed residential rentals up 1.1 percent quarter-on-quarter to $4.65 psf a month, based on preliminary estimates released by Jones Lang LaSalle (JLL).

The slight increase in rentals in existing projects was driven by higher rentals commanded by new completions, said JLL.

The first eight months of the year to August saw about 1,520 units completed in districts 9 to 11, including notable projects like Ardmore II and Skypark, where leases are transacting higher than the market average.

While average rentals in the popular Central districts were sustained, those in the traditional East Coast districts dropped 4.3 percent quarter-on-quarter to $3.30 psf a month.

Though rentals may be boosted by the completion of good quality projects, the market average for prime residential properties is likely to maintain or increase slightly, considering the substantial supply in the next few years. About 14,000 more units are expected to be completed from the end of Q2 2010 to 2015, which translates into about 2,500 units per annum on average.

While this may result in concerns of oversupply, Dr. Chua Yang Liang, research head for South East Asia at JLL, said the upcoming supply is much welcomed by the property market.

“The upcoming supply in the prime market is expected to raise the proportion of developments aged 10 years and below from the current 44 percent to 47 percent by 2015. With the collective sales market becoming active again, there are also opportunities in acquiring properties built more than 20 years ago – which now makes up almost a quarter of the existing stock – and redeveloping them into smaller units for attractive returns,” said Dr. Chua.