Rents for apartments in the city fringe areas are on the rise and this is being attributed to the concurrent increase in the number of small units that are generally under 500 sq ft in size.
In a study by CBRE, rents in the city fringe, which covers areas like Balestier, Bishan and Geylang, rose to S$3.36 per square foot (psf) per month (pm) by the third quarter of this year, up from S$3.15 last year. (Median rents in the city fringe were S$2.86 psf pm in 2008 and S$2.64 psf pm in 2009).
Mr Li Hiaw Ho, executive director of CBRE Research, said: “The increase in rents in the Rest of Central Region (RCR) corresponds to the rise in the number of small-format sized apartments in Serangoon, Balestier and Geylang over the last few years. Renting in the city fringe area, near the CBD, is a viable option with more expatriates having switched over to local packages in recent years.”
Mr Li noted that since 2009, the gap between city fringe areas (or RCR) and core central region (CCR) has narrowed from 29 per cent in 2009 to 24.5 per cent in Q3 2011. CBRE also projects that the gap will probably stabilise at around 26 per cent by the end of this year, as rents in both CCR and RCR remain at current levels in the coming months.
According to CBRE, rents in the CCR hit S$4.30 psf last year after having fallen to $3.72 psf in 2009. CCR rents have risen to S$4.45 so far this year, after recording a lower increase of 15.6 per cent over the 2009-2010 period compared to the RCR at 19.3 per cent.
Outside of the Central Region (OCR), rents have seen steady increases. Last year, rents increased 17.5 per cent to S$2.68 psf from a low of S$2.28 psf in 2009.
Compared to RCR, rents in OCR have increased at a slower rate partly because of the large supply of HDB flats that are available for lease in the OCR.
Overall, Mr Li said: “Rents are likely to stabilise in Q4 as leasing activity eases. The sluggish economic growth projected for 2012 may translate to reduced job opportunities for expatriates. Coupled with a high number of new completions in 2011 and 2012, there will be some pressure on rents going forward.”
Source : Today – 7 Nov 2011
