Property experts said the strongly performing economy and low interest rates continued to drive keen investor interest in these two sectors.

Latest figures from the Urban Redevelopment Authority show prices of industrial properties rose 8.3 per cent over the preceding quarter’s prices, while those of office properties rose 4.9 per cent.

Rents for both also gained strongly. Industrial rents were up 6.3 per cent, while office space rents rose 5.4 per cent.

Analysts said the strong interest in industrial space came as more companies set up new operations or expanded existing capacity in Singapore.

This was due to the healthy recovery in global trade and the strong rebound in Singapore’s manufacturing sector in the first quarter of this year.

The industrial property market is likely to enjoy spin-offs from other segments such as retail.

Shop owners might see industrial space as an alternative for production or storage activities, said Mr Ong Kah Seng, senior manager for Asia-Pacific research at Cushman & Wakefield.

Analysts also expect Singapore’s office property market to do well. Colliers International data showed that as of the end of last month, monthly gross rents of Grade A office space in the Raffles Place/New Downtown area posted further growth of 8 per cent compared with the previous quarter’s figure, hitting $9.72 per sq ft.

Source: Straits Times, 26th April 2011

ROOMS in some Housing Board (HDB) flats are being marketed like hotel rooms to tourists looking to save money on accommodation.

About 50 posts can be found in room rental and classifieds sites online, offering such rooms. As with hotels, rates are higher on weekends. Housekeeping is available, for an extra fee, as is an airport pick-up.

Tourists on short-term visits have their pick of rooms across the island – from Kallang and Geylang to Jurong and Sengkang. The posts state the location, ‘room rate’ and facilities; some even come with photographs to give interested parties a preview.

The problem: It is all illegal.

When contacted, HDB said its flats are not to be let out to tourists, and home owners who do this risk being fined and served compulsory acquisition orders.

The spokesman said the board has received queries from flat owners about subletting rooms to tourists, but has advised them against doing it.

‘A tourist’s length of stay is usually short, and the turnover of such ‘occupiers’ is expected to be high. This may lead to high human traffic to and from the flat, which will disrupt the pleasant living environment and ambience in our HDB estates,’ the spokesman said.

The board added that subletting of rooms to ‘non-approved sub-tenants’ like tourists is an infringement of the lease and the board can take stern action through a fine or even a compulsory acquisition of the flat.

Asked whether any home owner has been penalised for this so far, HDB said the figure was not available.

Meanwhile, some home owners are making money on the side this way.

On one website, a home owner said he was looking to let three of the four bedrooms in his 1,184-sq-ft apartment in the west, which he shares with his wife. They have no children.

In their flat, the rooms set aside for paying guests are even named – Belgium Suite, Snow White Suite and Little Swedish, which he claims are as clean as those in ‘a typical five-star hotel’.

He charges a daily rate of between $52 and $82. His ‘guests’ pay a cleaning fee of up to $132, and $28 for an airport pick-up.

Payments, due before check-in, are only in cash or by bank transfer.

When The Straits Times asked whether rooms were available for the week, the owner said it was a full house.

‘Recently it’s been quite packed, perhaps because of F1,’ he said, adding that he has been letting out the rooms to supplement the family income for three years.

Beyond the money, he said, it has been interesting getting to know people from other cultures; he has had guests from Japan, France and Germany, all of whom booked his rooms online.

Over in Jurong West, a part-time tutor is making available two bedrooms in her maisonette. Bookings are for at least seven days, at $50 a day.

Many other advertisements to which The Straits Times responded were placed by owners or occupiers from India, the Philippines and China, who target their fellow countrymen here to look for work or on holiday.

A Hong Kong woman who stayed in one such ‘vacation home’ in Redhill this year said she was put off by the cost of a hotel room.

‘The rooms in Singapore are at least $200 per night – too expensive for a short break in a nearby country. I paid only $60 a night for the flat,’ said the 26-year-old, who wanted to be known only as Ms Shum.

For that price, she said, she got a clean room and even tips on the sights she should catch while in town.

Source: Straits Times, 5 Oct 2010

While Mickey Mouse flats may be relatively affordable, buyers should be aware that rents depend on location and proximity to amenities

Buying a shoebox apartment for lease sounds like a very attractive proposition because such units are relatively more affordable. But investors should know what to expect because not everyone will want to rent such small units, experts said.

A record number of these small-format homes – also known as Mickey Mouse flats – have been sold in the first three quarters of the year, and at higher and higher prices.

The sale of 906 apartments of 500 sq ft and below in that period is 84 per cent higher than that in the same period last year, said CBRE Research, citing URA Realis. This has also exceeded the full-year sale of 722 units last year, it said.

Median prices of such homes have risen to $1,314 per sq ft (psf) so far this year, from $1,190 psf last year, and asking rents on a psf basis are comparable to those for prime developments in town.

‘At first glance, investing in shoebox apartments might appear to be an attractive proposition due to the relative quantum affordability and rental yields,’ said CBRE Research executive director Li Hiaw Ho.

However, the rents will depend on many factors, such as location, proximity to amenities, and demand and supply conditions, he said.

Currently, some owners of one-bedroom and studio units in projects such as Kembangan Suites in Kembangan, Parc Imperial in Pasir Panjang and Soho 188 in Race Course Road are asking for rents of $2,000 to $3,600 a month.

In July, a 431 sq ft one-bedroom unit in Urban Lofts in Rangoon Road was leased out at $2,400 a month, while a similar-sized one-bedroom unit at Mountbatten Lodge in Mountbatten Road went for $2,300 a month.

Based on current valuations, indicative gross rental yields for shoebox units are estimated at 3 per cent to 5 per cent, said CBRE Research.

‘These figures, however, do not take into account the utility and condo management fees, insurance, mortgage interest payments, property taxes and maintenance charges – all of which will make the net yield considerably lower,’ said Mr Li.

ECG Property chief executive Eric Cheng said most people buy shoebox units to lease out but they should be aware that any rental projection given at the launch may not pan out.

For instance, when a project in the Thomson area was launched a few years ago, the rentals were projected at $3,500 to $4,500 a month, but the transacted rents now are more like $1,800 to $2,600 a month, he said.

Cushman & Wakefield’s senior manager of Asia-Pac research, Mr Ong Kah Seng, said a large supply of shoebox apartments is scheduled for completion, and rents may come under pressure as leasing competition intensifies.

Also, while tiny apartments seem suitable for single expatriate tenants, not all will want to pay so much for a small unit unless it is in a prime area, or conveniently located near an MRT station, experts said.

Said Mr Ong: ‘Owners of shoebox apartments… can at best rely on junior expatriates, besides local professionals.’

But since junior expatriates are cost-sensitive, they may be open to HDB flats which are conveniently located and offer a larger space for nearly the same rent as that for a shoebox apartment, he said.

Yet, CBRE Research found that more people are paying higher prices for a shoebox unit during new launches.

Buyers picked up 383 new shoebox units which cost $600,000 and above in the first nine months of this year, compared with 133 last year and 121 in 2008.

Experts said the question is whether these units can support even higher rentals when they are completed.

The introduction of cooling measures by the Government in late August has also affected the ‘flippers’. Extending the imposition period of the sellers’ stamp duty of about 3 per cent from one to three years makes it less lucrative for speculators to flip a unit, experts said.

Previously, investors could make significant capital gains from shoebox units with just a small investment sum and a short holding period.

Of the shoebox units launched last year, 66 units were sold in the first eight months of the year for capital gains of $6,400 to $232,000, said CBRE Research.

But for projects launched this year, only four units were sold and gains were in the $9,400 to $101,000 range, it said.

The ‘already high buy-in prices’ during a new launch might make it hard for an investor to sell it later at higher prices unless it is in a prime location, said Mr Li.

In the next few months, about 10 projects with mainly small-format units are expected to be launched. Apart from one in River Valley Road, the rest are in suburban areas such as Geylang and Eunos, said CBRE.

Source: Sunday Times, 3 Oct 2010

Some recently-completed prime condominium developments are commanding above-market rents and thus helping to prop up the average rentals in existing prime projects, said a recent report from Jones Lang LaSalle.

But other properties in the central areas as well as those in alternative locations are already feeling the impact of the new supply, it said.

The consultancy’s preliminary estimates showed that average prime non-landed residential rents rose 1.1 per cent quarter-on-quarter to $4.65 per sq ft (psf) a month in the third quarter.

Yet, average rentals in popular central areas such as the Central Business District remained unchanged in the third quarter while rentals in the popular East Coast districts slipped 4.3 per cent quarter-on-quarter to $3.30 psf per month.

Overall, the rental market is likely to remain largely flat in the coming months, experts said.

The new prime supply in the market includes projects such as Skypark at St Thomas Walk, Ardmore II in the posh Ardmore Park area and Belle Vue Residences in Oxley Walk.

Jones Lang LaSalle said that from the beginning of this year to last month, about 1,520 new units have been completed in prime districts 9, 10 and 11.

While it is unable to release the deals done due to confidentiality, average rentals around the Ardmore area remain stable at around $18,000 per month (or about $5.50 to $6.50 psf), with some units fetching less due to construction work in the vicinity, it said.

According to OrangeTee head of research and consultancy Tan Kok Keong, the recent completion of projects means that tenants now have more choices.

‘As a result, rents at better located projects are holding firm while rents at those that are affected by temporary inconveniences are softening.’

For instance, the asking monthly rent for a unit at Ardmore II was reduced from $14,000 to $11,000 due to the construction noise in the vicinity, he said.

New completions will intensify competition in the leasing market, as better located or newer units will command a rental premium, said Cushman & Wakefield’s senior manager of research, Asia Pacific, Mr Ong Kah Seng.

This is especially so as there are more new developments that come with more unusual designs and exclusive lifestyle concepts.

Still, tenants will choose newer premises only if the rental premium is minimal, he said.

‘Some slowdown in leasing activity leading to a muted pace of rental recovery is in sync with the moderation in economic recovery,’ he said.

While the recent round of cooling measures is targeted at speculators, the leasing market may also see some spillover effect.

‘Given that the private residential market will undergo a temporal softening after the slew of government measures, tenants are unlikely to be willing to accept significantly higher asking rents,’ said Mr Ong.

Looking further ahead, experts said a substantial upcoming supply of prime homes in the next few years is expected to keep prime rents in check.

As more of these new prime projects come onstream, rents of some older properties are likely to be hit, said Jones Lang LaSalle’s head of South-east Asia research Chua Yang Liang.

‘Over time, the rental premium in new projects may ease if tenant demand is unable to keep pace with the supply coming onstream,’ added Dr Chua.

An estimated 14,000 more units are scheduled for completion from the third quarter to 2015, which translates to around 2,500 units per annum on average or 1.5 times the historical 10-year average of around 1,600 units per annum, he said.

Source: Sunday Times, 26 Sep 2010

The number of flats approved for sub-letting by the Housing and Development Board (HDB) exceeded 14,000 in the first half of this year.

This is almost 94 per cent of the total for 2009. This year’s quarterly average of 7,000 transactions is almost double last year’s average of 3,750 units.

In particular, the number of rental transactions for three-room HDB flats has already exceeded last year’s total by 235 units or 4 per cent.

Though Q3 numbers from the HDB are not yet available, it is likely that rental transactions for all the other flat types would have surpassed last year’s total.

The surge in rental demand is not surprising, considering the country’s double-digit GDP growth and full employment.

As companies increase hiring and the two integrated resorts continue to create buzz, the HDB rental market should remain strong.

Tenants for HDB flats are typically Asian professionals, service industry staff, foreign students, and permanent residents (PRs).

Currently, three-room flats account for about 39 per cent of rental transactions; four-room – 31 per cent; five-room – 22 per cent; and executive flats – 7 per cent.

ERA’s transactions show that median rents across all flat types have increased by an average of 5 per cent in Q3.

Going forward, rental demand will continue to surge as Singapore’s economy powers ahead.

Also, PRs affected by HDB’s new policy of having to sell their properties in their home country when they buy a HDB flat could decide to rent for now. This will add to the rental demand for HDB flats.

We may soon see quarterly transactions come close to 8,000 units and this is likely to push rentals up again – possibly by 8-10 per cent over the next year.

The writer is associate director, ERA Asia-Pacific

Source: Business Times, 23 Sep 2010

Analysts said this is because of the shortage of private housing.

And the supply situation may not improve this year as only 5,000 private housing units are expected for completion by year’s end.

The government’s forecast on the number of foreign workers here comes on the heels of an expected boom in the job market.

And as housing needs for these foreign workers increase, rental rates are likely to follow.

“This could cause rentals to rise anywhere from 2 to 5 per cent for the second half of this year,” said Nicholas Mak, executive director of Research and Consultancy at SLP International.

Second-quarter figures from the Urban Redevelopment Authority (URA) showed private property vacancy rates were at 5.4 per cent.

Analysts said private residential property rental yields are currently at 3 to 4 per cent.

With the rise in foreign workers, they expect rental yields for non-landed properties to increase by about 1 per cent.

“Typically, the rental market in Singapore is pretty stable. It will only drop, for example, in times when the economy is in a recession. That’s when big numbers of foreign workers may then leave the country,” said Eugene Lim, associate director of ERA Asia Pacific.

Analysts said the latest cooling measures are also unlikely to impact the private property rental markets over the short-term.

One of the new measures introduced include a lower loan-to-value ratio at 70 per cent for buyers with more than one mortgage.

This may deter buyers who plan to purchase a second property for rental and investment purposes, analysts said.

Source: Channel News Asia, 15 Sep 2010

These colonial bungalows, which are being offered on a master tenancy basis, are approved for residential use.

The successful tenderer will get an initial tenancy period of three years, with an option to renew for two more three-year terms.

The bungalows have a gross floor area (GFA) ranging from about 210 sq m to 1,140 sq m, with a land area of about 1,500 sq m to 18,000 sq m.

The guide rent for master tenancy of the 33 bungalows is $488,300 per month.

Together, the properties have a total GFA of about 17,300 sq m.

Their combined land area of about 181,600 sq m works out to about 22 soccer fields.

The bungalows are a charming throwback to Singapore’s colonial past and rich in historical value.

Besides their architectural significance, the bungalows run along the tranquil and leafy Mount Pleasant Road, which has been designated by the National Parks Board as a Heritage road.

Only those who have a proven track record in financial management, and standing, experience and technical capability and expertise, may participate in the tender, which closes on Sept 21.

Source: Straits Times, 1 Sep 2010

But these establishments have come under scrutiny by government agencies, which say that some may not be operating legally and have clamped down on at least two in recent weeks.

At least nine such foreign worker hotels have come up in the past two years. Seven of them are owned by local property company DRA Property Management, spread out over Desker Road, Rowell Road and Dunlop Street.

One is operated by supermarket chain I-Tec above its Jalan Besar retail outlet, while the ninth is operated by the owner of Lamea Restaurant in Desker Road.

They have come up due to demand from foreign workers, particularly those who have not been housed in dorms by their companies, as well as tourists on a tight budget and foreign job seekers looking for a cheap place to stay.

The big attraction is their rates, which can be a fraction of what traditional hotels charge.

Rates range from $7 a night – for a bunk bed in a dorm-like room that can fit up to 30 people – to about $1,200 a month for an air-conditioned room shared by four people.

But it appears that such businesses may be operating on locations that have not been zoned for hotel use and are meant for other purposes, such as commercial or residential activity.

In addition, most of them do not have hotel licences, claiming that they are merely ‘residences’. But technically, they meet the Government’s definition of a hotel or boarding house, in which case they would need a licence and must operate on a location zoned for hotel use.

This definition, by the Hotel Licensing Board, states that any place with four or more rooms hired out for a fee, and that provides domestic services such as room cleaning, must get a hotel licence.

The Urban Redevelopment Authority (URA) has already told at least two DRA residences in Rowell Road to shut down by the middle of next month because those sites have been zoned for commercial use and not for hotel use. The DRA spokesman said the company plans to appeal.

Mr Jolovan Wham, spokesman for foreign workers’ rights group Home, said that such establishments helped to fill a gap in housing, by providing cheap yet comfortable accommodation.

‘Other places can be quite squalid, with no proper management. At least these boarding houses are maintained well, sometimes even with air-conditioning,’ he said.

Guests also gave the thumbs-up, saying such establishments provide good service at a low cost.

Mr Dhanam Tennakoon, 74, who is from Sri Lanka, has been sharing a room with two relatives at a DRA residence for the past six months while one of his relatives seeks medical treatment here.

‘We like this place. It’s very reasonable, and it lets us do our own cooking and washing,’ said Mr Tennakoon.

When told that the establishment might be illegal, he shrugged. ‘We pay, and we stay. That’s all I know.’

But others are less thrilled to see such businesses springing up. The Straits Times understands that the URA has received a number of complaints from the public, alleging that some of them are illegal boarding houses.

A URA spokesman said it is investigating some of these establishments.

Under the Planning Act, a person responsible for unauthorised use of a property may be fined up to $200,000 and/or imprisoned for up to a year. If the offence continues after conviction, a fine of up to $10,000 per day may be imposed.

Owners of unlicensed hotels may also be fined up to $2,000 on the first conviction, under the Hotel Act. For subsequent offences, the person may incur the same fine and/or be sent to prison for up to six months.

Source: Straits Times, 25 Aug 2010

Under a new rule introduced on Feb 1, anyone subletting rooms in HDB flats must register within seven days; those who had sublet before that date were given a six-month grace period until July 31 to do so.

This requirement dovetails with efforts by the Ministry of Home Affairs (MHA) to eradicate loan-sharking activities and protect HDB residents from falling victim to such activities.

When some people borrow money from loan sharks, they move to a new location but give the loan sharks their previous addresses.

This way, if they fall behind on payments, those living at their former addresses will be the ones harassed by the loan sharks.

The new rule enables HDB to capture the particulars of those who rent rooms in HDB flats and allows MHA to trace the movement of borrowers.

HDB may impose a penalty on those who fail to register their subletting.

The penalty could be a fine of up to $3,000, and for recalcitrant cases, HDB could take back the flat.

Source: Straits Times, 7 Aug 2010

Overall median monthly rentals inched up in the second quarter, helped by the demand from those fleeing from high private property rents. Foreigners and locals who have sold their homes in a hot market are among those boosting HDB rents, experts say.

Overall, median rentals for two- and three-room flats were flat at $1,200 and $1,500 respectively. But four-room, five-room and executive flats saw median rental increases of between $50 and $100 a month from the previous quarter.

Four-room flat monthly rentals rose to $1,800 from $1,750, five-room flat rentals were $2,000 from $1,900 and executive flat rentals climbed to $2,100 from $2,000 in the previous quarter.

Median rentals for executive flats in Queenstown also passed the $3,000 mark for the first time since the fourth quarter of 2008, rising to $3,200. There were, however, fewer than 10 of such sublets.

Five-room flats median monthly rentals in the central region also hovered over the $3,000 benchmark for the second consecutive quarter at $3,150.

Executive flats in Jurong East saw one of the largest jumps, of $300, from $2,100 to $2,400, while areas such as Bukit Batok and Sengkang generally saw higher rentals across all flat types.

Property experts say these second quarter median rentals have hit the peak previously achieved in the second half of 2008. They expect further rise and new benchmarks to be set later this year.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said as private rentals rose steadily, some tenants were likely to look for cheaper alternatives.

‘The rate of rental increase might have outpaced the rental budget and so some tenants might prefer an HDB flat in a better location,’ he said.

HSR executive director (agency) Jeffrey Hong said that the strong demand is partly due to an influx of foreigners this year into sectors such as information technology, as companies have started hiring again.

Some Singaporeans who sold their property to cash in on high property prices have also decided to rent temporarily instead of buying immediately, he said.

Ms Hwa Hui-en, 24, a social worker, has been renting a four-room flat with four others near Ghim Moh for $2,000 a month since November last year.

She is worried her rent might rise when her lease ends in November as some of her friends have had to move out of rented homes due to higher asking rents.

‘Rentals are quite costly… We’re splitting the rent among five people and are sharing rooms now. If we don’t, it will probably take up a huge portion of our salary, maybe even one quarter of it.’

HDB said subletting deals rose about 15 per cent from 6,606 in the first quarter to 7,595 in the second – taking total approved sublet units to 30,500.

Source: Straits Times, 24 Jul 2010