20,000 new homes put pressure on rents

By Feily Sofian / The Edge Property | February 10, 2017 5:00 PM SGT
The rent decline at many apartments and condominiums was more severe than indicated by official indices. Rents for one-bedroom units were estimated to have dropped 2.2% q-o-q in 4Q2016, based on average rents at apartments and condos with at least five contracts in each quarter.
Rents for two-bedroom units fared slightly better, declining 1.5% q-o-q over the same period. The URA rental index for non-landed homes, meanwhile, slipped just 0.7% island-wide.
Around 20,000 units of apartments and condos, excluding executive condos (ECs), were completed in 2016. It was the highest annual supply seen historically, beating past records of 18,953 units in 2014 and 18,182 units in 2015 (see chart).
The elevated supply came with slower population growth and leaner expatriate budgets. Surprisingly, the vacancy rate for private residential units in the suburban segment fell from 8.4% in 4Q2015 to 7.1% in 4Q2016.
The bulk of the new supply was in Bedok, Hougang, Sengkang, Toa Payoh and Kallang. Major projects completed in these areas include Bartley Ridge (868 units), Eight Riversuites at Whampoa East (862 units), Jewel @ Buangkok (616 units), La Fiesta at Sengkang Square (810 units), Riversails at Upper Serangoon Crescent (920 units), Sant Ritz (214 units) and Sennett Residence (332 units) next to the Potong Pasir MRT station, The Tembusu near the Kovan MRT station (337 units) and Urban Vista near the Tanah Merah MRT station (582 units).
The influx of new projects is putting pressure on existing properties located in their vicinity. Rents for one- and two-bedroom units at Optima @ Tanah Merah, which is next to Urban Vista, were down 9% y-o-y in 4Q2016.
Separately, rents for one-bedroom units at Nin Residence, located near Sant Ritz and Sennett Residence, fell 5% from $2,193 a month in 3Q2016 to $2,080 in 4Q2016. There were insufficient rental contracts for y-o-y comparison.
Rents for one- and two-bedroom units at Optima @ Tanah Merah (pictured), which is next to Urban Vista, were down 9% y-o-y in 4Q2016.
Competition has also intensified in the West Coast area, following a slew of new completions, including The Vision...