Thursday, September 24, 2009

HDB rental market stabilises for now

OVER one year, HDB-approved sub-letting cases surged by some 20 per cent from 12,808 units in 2007 to 15,344 cases in 2008. In the same period, the increased demand pushed HDB rentals across the board upwards by 23 per cent.

The main tenants for HDB flats are typically Asian professionals, service-industry staff, foreign students and permanent residents (PRs).

Typically, 3-room flats account for about 35 per cent of rental transactions; 4-room - 34 per cent; 5-room - 23 per cent; and executive flats - 8 per cent.

The market hit its peak in Q2 2008 with an all-time high of over 4,100 rental transactions. However, with the slowdown in the economy and overall employment, rental transactions slowed to an average of 3,700 units a quarter for the next one year (Q3 2008 to Q2 2009).

This has helped to stabilise median monthly rents at $1,500 for 3-room flats; $1,900 for 4- and 5-room flats; and $2,000 for executive flats; for now.

However, as the two integrated resorts step up their hiring of foreign staff, we could see the rental demand for HDB flats increase in the months ahead.

Also, as the economy recovers, new demand from inbound foreign professionals and students may further increase demand.

We may see quarterly demand nearing 4,000 units per quarter next year and this would probably push rentals up again, possibly by another 5-10 per cent.

Source: Business Times, 24 Sep 2009

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