3-month short term rental of private homes now allowed

Though the short-term lease of properties on sites such as Airbnb is still not legal in Singapore, leasing of private homes for a period of 3 months is now allowed. Under previous regulations which was implemented in 2009, the minimum rental contract period was 6 months. 

Cavenah LOdgeLandlords and tenants alike may rejoice as this means greater flexibility in terms of negotiating lease arrangements. For tenants looking for an option to serviced apartments or hotels, an entirely new market has opened up as those who were in between housing options (e.g. renting a place while waiting for renovation work to be done in their current or future home) or in Singapore for short-term study or work purposes. 

This welcome change stems from a public consultation exercise in 2015 which showed a majority of its respondents supporting a shorter minimum lease period. This new move may bring good cheer for some private home owners though it may not be much of a change for agents specialising in rental properties as the yields for short-term rents are considerably lesser than say a one- or two-year contract. Property analysts are not expecting much change in the rental market as landlords may still favour longer contracts as it saves them the trouble of waiting on new tenants. 

The rules are already in place and take effect immediately. Violations of the regulations may warrant fines of up to $200,000. 

En bloc sales take centre stage this year

Yet another former HUDC estate has been put up for collective sale. Serangoon Ville situated in Serangoon Ave 1 has been made available for en bloc sale and the selling price is expected to be between $400 million and $430 million. The costs will be high for this land site as an additional $200 million to $220 million is required to intensify the land and to refresh the land lease by 99 years. The estate was privatised only in 2014 and has 69 years of lease left.

SerangoonVillePhoto credit: Google Maps Singapore

Property players and watchers are expecting developers to bid efficiently for this land site that averages out to be $720 psf per plot ratio, particularly since recent sales of ex-HUDCs such as Eunosville and Rio Casa were closed successfully and above asking prices. Currently, Serangoon Ville houses 7 blocks of 244 apartment units, including some maisonettes, with sizes ranging between 1,625 sq ft and 1, 733 sq ft. One redeveloped, the 296,913 sq ft plot could potentially yield 750 to 900 units.

2 other former HUDCs – Tampines Court and Florence Regency – are already in the process of putting their estates up for sale. The latter is planning to commence signing of their collective sale agreement in July this year. This year’s healthy new home sales has possibly boosted developers’ confidence in the market’s stabilisation and future recovery.

But with the number of private land sites being sold and private estates sold en bloc, one cannot but help to wonder how Singapore’s real estate sector will look like in 3 to 4 years’ time. Add the Bidadari township into the mix, the market might be seeing a huge entry of public and private housing within the next 5 years. Rents have been sliding due to the increased number of completed and available properties in the recent couple of years, how will the market react then?

Market recovery uncertain despite rise in resale condo prices

May was a rather good month for the resale private condominium market as prices rose 0.4% and sales volume increased by 17.4%. In comparison with the same month last year, prices have risen 1.5%.

CreekBukitTimahAll signs seem to be pointing to a market recovery after 3 years of lacklustre performances. However, some property analysts are taking a more conservative stance with regards to the recent price adjustments. The leasing market remains weak and rental prices have fallen, putting additional pressure on an already-weak market hence the market is still a ways from bottoming out. Private property values have fallen 11.6 per cent since the peak in Q3 of 2013.

skyline-residencesPrices of resale properties in the core central and city-fringe regions have shown improvements with a 1.1 per cent rise from April. In the suburbs, prices fell slightly by 0.4 per cent. A moderate look at the current situation would more likely than not mean a gradual rise in prices over the course of a year rather than a quick and immediate recovery. A recent hash of high land bids and the gradually diminishing stock of unsold private homes do however seem to be beacons of light, however dim, pointing towards the promise of a market stabilisation at the least. Positive sentiments and sales at new project launches and continued low interest rates may add icing to the cake if developers can have it and eat it too.

 

The redevelopment of Johor Bahru City Centre

As it is, Singaporeans are heading north to Johor Bahru (JB) for business, leisure and even to live. But with massive plans to re-develop JB into hubs of many industries, what impact will it have on the real estate scene there as well as here in Singapore?

coronationasquarePhoto credit: www.skyscrapercity.com

Areas outside of Johor Bahru’s city centre, areas such as Iskandar Puteri and Danga Bay have been attracting many foreign investment dollars over the past few years. But JB’s city centre could be the place that will reveal major yields in the long term as it’s essentially the transport, retail and commercial hub of the city.

So it is perhaps not surprising that the government has put a RM20 billion (S$6.48 billion) plan in place to rejuvenate the ageing district. Launched in 2015, the plan aims to develop JB’s city centre into an international business district, complete with all-new infrastructure – the Ibrahim International Business District (IIBD). The most recent unveiling was the 268m link bridge which is targeted for a 2017 completion. It will connect the JB Sentral railway station and bus terminal to Persada Annexe, an extension of the Persada Convention Centre.

But perhaps the true gem of the project is Coronation Square, a major mixed use development. The RM$3 million project is overseen by Coronation Properties and consists of 6 towers – 2 office blocks, 1 condominium block consisting of 480 high-end apartment units, 1 block of serviced apartments, 1 hotel and 1 tower dedicated for medical purposes. The residential units have not yet been put up for sale, but the developers are so bullish about its potential they have already started the construction process.

AstakaJBAnother large-scale development near the city centre is the One Bukit Senyum project located just off the Tebrau expressway. Aside from a shopping mall, residences and a 5-star hotel, it will also house the Johor Bahru City Council‘s new headquarters. The residential component of the project is The Astaka, with 438 units spread across 2 blocks of 65- and 70-storeys. Already 300 units have been sold and Singaporeans make up more than half of the buyers.

As Singapore and Malaysia continues to improve on their inter-country accessibility, the demand for properties across both borders will remain high.

Limits placed on tenancy of private homes

From today on, private homes can no longer be tenanted by more than 6 unrelated persons. This is 2 lesser than previous cap of 8 persons.

Enforced by the Urban Redevelopment Authority (URA), the new ruling kicks in today but existing tenancy agreements of 7 or 8 persons will be allowed to carry on until May 15, 2019 regardless of the tenancy contract’s expiration date.

TownervilleThis change was made to keep the integrity and character of the local community and to ensure that residential premises integrate with the neighbourhood. The move will also better engage the services of student hostels and company dormitories. There are differing views to this change. Property agents, some landlords and even tenants may welcome this shift towards quieter and less disruptive living environments. Others who are relying on rental income to prop up their finances may have opposing views. The loss of 2 tenants could very well surmount to $1800 to $2600 in potential monthly rents.

This shift to tenancy regulations will also affect home-sharing market such as Airbnb. The URA has been considering the creation of new leasing category for short-term rentals such as those publicised on home-sharing sites. And for those wondering if a huge bungalow and a small private studio may have different restrictions? The answer is no. URA has stated that there is no “stratified occupancy cap control based on unit sizes”.

Aura83For HDB flats which are sublet, the number of sub-tenants allowed remain unchanged at 6 and 9 for 3-room and 4-room or bigger units respectively. Property analysts are however expecting this new tenancy rules to soon apply for the HDB market.

 

Condominium rents up, HDB rents down

A brieft respite in the rental market presented itself in January and February as increases in condominium rental rates were recorded for 2 consecutive months. HDB rents however slipped slightly.

Draycott8Condominium rents rose 1.1 per cent in February as demand from expatriates is usually high in the first few months of the year. Private residential properties in the prime districts were particularly in demand with a rise of 1.2 per cent in rental rates, while the city fringe and suburban sectors saw a 0.8 and 1.2 per cent rise respectively.

Property analysts are seeing an increase in leasing demand not only due to the influx of a foreign workforce in the beginning of the year, but also because rents are now at a affordable levels and more tenants may be willing to take on larger properties or properties in a more expensive location. Though rents are still 18.1 per cent lower than the peak in 2013, sales volume has increase by 12.6 per cent in comparison to the same period last year.

JurongWestCentralHDBFLatThe number of HDB flats being leased has also increased by 1.2 per cent with 1,477 units rented in February. HDB flat rents have however slipped by 0.8 per cent overall, falling 1.3 per cent in mature estates and 0.3 per cent in non-mature estates. Industry experts are expecting further decline in rents this year, while harbouring hope that 2017 will stabilise the market and bring about a recovery early next year.

Weak rental market not an obstacle for investors

While the weakening rental market may have been putting pressure on investors, the concurrent weakening private property prices are opportunities to some. While the leasing market has slowed down considerably, the property-purchasing market has been gaining speed, especially in the last quarter or so.

TRE ResidencesThe overall genial atmosphere in the private residential property market over the past few months have brought property investors back into the heat of things. As more newly completed properties enter the market and new projects such as The Clement Canopy and Grandeur Park Residences were launched to affirmative responses early in the year. Overall private home prices fell at the slowest rate in 3 years, which could point to an increasingly stabilising market.

It would be prudent however for investors to take into consideration that the property cooling measures have not yet been lifted, though some signs of relief have been provided earlier this month. In the past, profits of up to 60 per cent could be reaped in the short-term, but the long-term potential of a property, rather than quick turnarounds or a dependency on rental profits, will be at the heart of a good investment henceforth. Property analysts advise investors to consider cash-flow, calculate mortgage and maintenance costs carefully while keeping a portion aside for periods of negative cash flow when  the property is unable to be tenanted.

New Tanah Merah condominium show flat draws thousands

Grandeur Park Residences premiered its show flat to a grand crowd last weekend as they thronged the Tanah Merah site in all eagerness. It will officially open for purchase on March 4.

GrandeurParkResidencesMost of the potential buyers were there to suss out the new 720-unit residential project situated near the Tanah Merah MRT station. Its proximity to the MRT station and location has no doubt attracted keen eyes. Most have spotted this new project for its rental and investment potential.

As more than half of the units in Grandeur Park Residences are one- and two-bedders, the more palatable quantum prices is a big draw for investors. Prices of the 2-bedroom apartments start from $700,000. Though the developers expected a big crowd at the launch of the show flat, the response has been overwhelming and is indeed a positive sign.

ParkPlaceResidencesThere has been glimmers of hope in the resale flat and rental markets just within the first month of 2017. The new condominium market has also been faring well even before the start of the year. And there will be at least 2 other major launches coming up in the months ahead, such as Seaside Residences in Siglap and Park Place Residences in Paya Lebar. Thus even though analysts are hesitant about calling it a good year for the market, consumer confidence is once again building up.