HDB rental market surging ahead

Published September 23, 2010
By EUGENE LIM


THE rental scene in the HDB market is buzzing, with strong demand for flats that is likely to continue as Singapore's economy powers ahead.

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: http://www.businesstimes.com.sg