Housing rents in prime areas have dropped for the first time in nearly four years, as uncertainty in the global economy meant fewer executives are being hired, according to Jones Lang LaSalle (JLL).
The global property consultancy firm said average rents in Districts 9, 10 and 11 fell 1.4 percent in the third quarter from Q2, the first decline since Q1 2008.
The drop was worse in the high-end residential segment, where Q3 rental rates plunged 1.9 percent from last year. Many experts said fears regarding global economic uncertainty are starting to be felt in the country, with companies halting hiring or holding back on employment packages for existing staff.
Dr Chua Yang Liang, JLL’s Head of Southeast Asia Research, said that this has affected demand for homes, particularly in prime areas, which typically attract new expats.
“This fall in demand, combined with an influx of new supply such as Nassim Park and Cliveden at Grange in the luxury market and City Vista Residences and Soleil@Sinaran in the typical prime market, has put downward pressure on rentals,” said Dr Chua.
“Increasingly, occupiers are not maximising their housing budgets and are opting for less expensive options or downsizing their existing properties to reduce accommodation costs.”
In contrast, data released by JLL showed that new properties in the central region, including Chinatown and the business district, as well as in the East Coast area, are becoming increasingly attractive to tenants, with rents remaining steady.
The report said that activity remains high in properties being rented at below S$6,000 a month, as people reduced housing costs.
Dr Chua said that mass-market rental flats are benefiting as a result. He does not expect home prices to decline, unless the Euro debt crisis worsens and affects Asia.
“Even if rents fall, owners might not be motivated to sell as there is no distress there,” he said.
He added that home prices in the city centre might remain steady, with an increase of under one percent in Q4.
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