Many factors affect condo rents. One of them is the extent and quality of furnishing that the unit has to offer. In Singapore, new condo units usually come partially-furnished with flooring, built-in wardrobes, a fully-furnished kitchen and bathrooms. It is also common for developers to provide a washer and dryer and occasionally a fridge.
Should property investors go one step further and provide furniture such as beds, dining table set, coffee table, sofa and television to command higher rents?
Analysis of asking rents on TheEdgeProperty.com shows that the rental premium of fully-furnished units over partially furnished ones is modest. The premium is estimated to be only $50 to $150 per month for a one-bedder and $100 to $250 per month for a two-bedder.
The premium is understandably higher for bigger units as furnishing larger units would cost more. Assuming the furniture set costs $6,000 for a one-bedroom unit and $8,000 for a two-bedroom unit, it could take more than four years for landlords to recover these costs.
Landlords who fully furnish their units may also find themselves in a spot. Cleo Lee, associate division director at ERA Realty Network, says “Some owners have to incur expenses to dispose their furniture if their tenants insist on bringing their own furniture.”
Alson Teo, senior associate director at OrangeTee, notes that the inventory list in the tenancy agreement gets longer with more furniture, which would complicate the damage clause.
Tenants, on the other hand, might prefer a fully-furnished apartment. It saves them the trouble of shopping and waiting for the furniture to arrive, or hauling them from one place to another. If they are not certain of staying long-term, renting a fully-furnished apartments would be a viable option. This way, they do not have to incur expenses in disposing the furniture upon leaving the country, or shipping them to a new destination.
It appears that the way to go around this mismatch would be to simply go with the flow and play by ear. For existing homeowners who have stayed in the unit and accumulated furniture, the natural choice would be to rent out the unit as it is, or fully-furnished, unless they plan to reuse the furniture in their new homes.
Those who just receive the key to their units, meanwhile, need not trouble themselves to buy additional furniture and fully-furnish their units. They can simply put up their unit in the open market and the decision to add furniture can be made later, depending on the tenants’ preference and needs. With slower population growth and elevated supply, it is a tenant’s market now and landlords would likely have to accommodate to tenants’ requests, be it for furnished or unfurnished units.
Average asking rents for fully- and partially furnished units*
* Island-wide private non-landed homes. Only projects with at least five rental listings each for fully- and partially furnished are included.
** 500-700 sq ft in high-end segment and 400-600 sq ft in city-fringe and suburban segments. *** 800-1,000 sq ft in all segments.
Source: The Edge Property
Estimated cost of furniture for a one-bedroom unit
Source: Dollars and Sense