Rise in office rentals slows to 2.7% in July

PRIME office rents went up by 2.7 per cent last month, the slowest monthly rise so far this year, according to a report by consultancy Cushman & Wakefield yesterday.

Since January, office rents have been rising by 4.5 per cent to 9 per cent.

An acute supply crunch and burgeoning demand from expanding businesses in Singapore have been pushing up office rents since last year, prompting market watchers to air concerns over Singapore’s competitiveness.

Although rents overall grew at a slower pace last month, monthly rents for prime offices – those in the Central Business District, City Hall, Orchard and Bugis areas – were at record highs.

Rents in these areas hit $11.82 per sq ft (psf) last month, up from $11.51 psf in June, said Cushman & Wakefield.

Rents in the top 25 Grade A offices, which are in the best category of space in Singapore, rose 2.8 per cent to an average of $12.07 psf per month.

In sought-after Raffles Place, rents now average $12.96 psf per month, about 58.8 per cent above the last peak in June 1996.

At the very top end, City Developments’ Republic Plaza has achieved monthly rentals of $17.50 psf, the developer said earlier this month.

Cushman & Wakefield managing director Donald Han said rents, although still on the rise, should climb at a slower pace.

‘We are already at a very high base, so any increase cannot go up at the same rate of 4 to 5 per cent every month,’ he said. ‘At some stage, it’s got to slow down.’

Mr Han added that tenants are actively looking to minimise increases in their occupancy costs by relocating some operations outside high-priced central areas.

Recent moves by the Government to provide more data on the office market and assure tenants of ample future supply also seem to have paid off, said Mr Han.

‘I think that has had some impact in terms of tenants resisting high rentals by landlords,’ he said.

However, Mr Han believes the balance of power still lies with the landlords. ‘In general, we’re still looking at a mismatch between supply and demand,’ he said.

‘But moving forward, tenant relationships and finding quality tenants may become more important than trying to chase the highest rents in the marketplace.’

Source : Straits Times – 22 Aug 2007

Suburban malls can command rentals close to prime locations: analysts

Captive shoppers in heartlands – like Jurong, Woodlands, and Tampines – are catching the eye of retailers.

And analysts say that is why some suburban malls can even command rentals similar to some prime downtown locations.

Some of Singapore’s heartland malls have been as big a hit with shoppers as their more upscale cousins in Orchard or the Raffles City area.

AMK Hub in Ang Mo Kio is the latest heartland mall on the block – following others such as Causeway Point in Woodlands and Jurong Point.

Food and beverage players at AMK Hub say the key is to choose areas with offices or government services so that the lunchtime crowd can help boost sales.

Mok Yip Peng, Managing Director, Soup Restaurant Group, says: “Our lunch crowd is made up of administration staff and executives from industrial parks and offices nearby while dinner is made up of families and newly-wed couples. The rental costs in downtown locations are slightly more expensive. The key benefit is that lunchtime crowd is guaranteed. As for dinner and weekend crowds, it’s about the same for both downtown and suburban locations.”

Besides offering dining options to working professionals, mall operators say crowds flock to heartland malls for the easy access to services and generally cheaper goods.

Peter Seetoh, Executive Director, Knight Frank Shopping Centre Management, says: “Convenience is a big factor because they can get what they need on a daily basis. But if they need something more in the higher fashion end, they’ll probably need to go downtown. The price points in the heartland malls are also more competitive from S$50 to about S$100 price range.”

However, rental costs for malls in the heartlands are not always cheaper.

It is estimated that the rental cost for shops in the basement AMK Hub works out to be about S$15 per square foot.

Property analysts say this is comparable to locations like Suntec City.

Orchard Road rents go for an average of S$20 per square foot.

And analysts say the higher rents in the heartlands can often be justified.

Daisy Loo, Retail Director, Jones Lang LaSalle, says: “Retailers do favour them, particular ones, because they have these captive shoppers group, which is their demand for goods and services is less fluctuating, more consistent. And also, they are less susceptible or less vulnerable to economic fluctuations, economic conditions or tourist arrivals.”

Jones Lang LaSalle research shows rents for malls in the heartlands dipped only 3 per cent during the the Asian economic crisis in 1997.

This compared to a 27 per cent fall in the Orchard Road belt and a 20 per cent decline in other downtown areas like Marina Bay. – CNA/ch

Source : Channel NewsAsia – 17 Aug 2007

Rental hikes force 20% rise in expats’ allowance

The soaring property market and supply crunch has forced employers to raise the housing allowances for expatriates by as much as 20 per cent.

Average apartment rentals in the prime districts of 9, 10 and 11 have jumped by 36 per cent in a year, a recent study by real estate consultancy Savills Singapore showed.

The American Chamber of Commerce’s annual Asean Business Outlook poll found that 61 per cent of the 95 senior executives in Singapore surveyed were dissatisfied with housing prices, up from 42 per cent last year.

Residential property prices in prime districts – where these executives were most likely to live – rose 25.4 per cent last year.

Islandwide, home rentals climbed 10 per cent last year.

Increases in housing allowances for this group is a concern as it could raise the cost of doing business in Singapore compared with other cities and blunt its competitive edge.

But housing rentals have also been rising in other global cities such as Hong Kong.

Some analysts have also noted that housing rentals are not the most critical component of the costs of expatriates, given the red-hot demand for top talent.

Recruitment consultants said some companies have already responded to the changes by adjusting the allowances that their expatriate employees get.

‘Companies that are regionally or globally headquartered here started to review housing allowances earlier this year.

‘Most have already revised and implemented the new allowances,’ said Ms Annie Yap, the chief executive officer of recruitment consultancy GMP Group.

While the allowances vary across industries, estimates indicate that they have risen by about 20 per cent.

Ms Yap said that a chief executive officer who previously received between $10,000 and $20,000 in allowance per month would now get as much as $12,000 to $24,000 a month.

A vice-president or regional head who was entitled to between $8,000 and $15,000 a month would now get a new allowance of between $9,600 and $18,000.

With an increasing trend for companies to give their employees a lump-sum package that covers housing, it is mainly senior executives who still get a separate housing allowance.

Mr Charles Moore, managing partner at recruiting company Heidrick and Struggles, agreed that allowances had been adjusted in some cases.

He said: ‘The revisions have been mostly market-led, rising from 15 per cent all the way to 100 per cent, according to the new rentals.’

Mr Mark Ellwood, managing director of recruitment consultancy Robert Walters Singapore, said: ‘Some have already completed the reviews and implemented them, especially with newly incoming expatriates, increasing allowances by about at least 10 per cent. The amounts vary across the industries.’

But there are still companies which have yet to revise their allowances – although it looks like there is growing pressure on them to respond.

Mr Ellwood said: ‘There are currently a number of companies reviewing existing housing allowances. They are also considering whether they need to start giving housing allowances to those who do not currently have them as part of their job package.’

Mr Paul Loo, a consultant at Michael Page International, said: ‘Some expatriates have asked for more, but there are companies I have encountered that have not committed to reviewing existing policies.’

But Mr Loo expected that ‘these firms will probably review their policies soon, especially towards the end of the financial year’.

Feedback from the expatriate community has led the American Chamber of Commerce to consider urging companies to make changes.

Mr Alonza Williams of the American Chamber of Commerce told The Straits Times: ‘We have received feedback about the state of current housing allowances and are looking into the matter.

‘We have not made any recommendations to companies, but may do so in future.’

US citizens who work abroad face double-taxation and are finding it tougher, especially with the recent cuts in housing allowances for Americans overseas.

When contacted, Mr D.M. Arulraj, Standard Chartered Bank Singapore’s head of human resources, said: ‘As part of our policy, we constantly monitor rentals closely and do make adjustments from time to time according to market conditions.

‘With current rentals rising in the prime districts, it will not be unexpected in the near to medium term to see new enclaves of preferred expat private housing to emerge.’

Source : Straits Times – 6 Aug 2007

Asia’s rent boom

It’s a common refrain from property agents these days, but one that irks flat-hunter Shen Man Yan.

‘Better view that apartment soon or risk losing it to someone else,’ they would advise Ms Shen, a 31-year-old lawyer who is looking for a flat in Happy Valley, a prime district for professionals and expatriates.

‘I don’t know if that’s a marketing ploy, or if the market is really that hot, but I hate it when I hear that,’ she said.

Analysts say it is a combination of both factors, with housing rents for professionals and expatriates here now among the priciest, if not the priciest, in the world.

Add that to similar double-digit rental increases over the past year for office space – bolstered by the promise of more mainland investment funds – and the city’s property industry looks pretty rosy.

A recent report by human-resource specialist ECA International showed that the cost of renting an expatriate apartment in Hong Kong is the world’s highest, at an average of US$8,592 (S$13,000) a month.

The figure was 17 per cent higher than for Tokyo, which ranked second, and 150 per cent over that in 15th-placed Singapore.

According to Mr Lee Quane, ECA general manager in Hong Kong, apartment rents in executive districts such as the Mid-levels and Happy Valley have jumped 25 per cent over the past two years.

The main reason for the spike is a limited supply of homes in the top districts.

A similar situation exists in the office space market, where a 17-year-low vacancy rate is pushing up prices in the prime Central district on Hong Kong Island.

US giant Morgan Stanley, for one, is said to be considering moving some operations from its Central address – traditionally de rigueur for the financial services trade – to less expensive Kowloon on the other side of Victoria Harbour.

Rents in the Kowloon hub of Tsim Sha Tsui average about HK$30 (S$5.80) per sq ft (psf) to HK$40 psf – less than half of the HK$90-HK$100 psf in Central.

For now, such increases in housing and office rents are hardly denting Hong Kong’s ability to attract investors. The city’s gross domestic product is expected to grow by 5.5 per cent this year.

One reason, noted Ms Karen Choi, research head of property firm Vigers, is that the average cost, while high, remains about 10 per cent off the peak in 1997 before the economy was ravaged by the Asian financial crisis and 2003 Sars outbreak.

‘Also, prices everywhere from Singapore to Shanghai are rising too,’ she told The Straits Times.

Said Mr Quane: ‘In the future, more companies will certainly consider moving to Shanghai, where housing costs are 50 per cent lower.

‘But then, tax rates there may also run as high as 45 per cent, which could prove just as costly for firms that pay taxes for their employees.’

The next logical option, he added, would be Singapore, which shares Hong Kong’s attractive tax regime but not its physical and political intimacy with China.

‘Hong Kong remains, for now, worthwhile for the large multinationals despite high property rents,’ Mr Quane concluded.

Source : Straits Times – 30 Jul 2007

Rents here too high? Not so, say expats

SINGAPORE and Hong Kong are keen competitors in most things but when it comes to rent, there is only one winner.

Ask Mr Jason Longley, the regional manager of an insurance company. A year ago, he was paying $8,500 a month to rent a 900 sq ft apartment in Hong Kong’s prime Peak area.

Now he rents a 1,400 sq ft flat at Leonie Hill off Grange Road for just $5,500.

Mr Longley, 35, said Singapore’s cheaper rent was a key factor in his decision to relocate: ‘I definitely saw rent as a huge expense in Hong Kong.’

It also helps put into perspective the growing complaints about rising rents.

Urban Redevelopment Authority figures out last Friday showed that residential rents rose 10.4 per cent in the April to June quarter and are up 31.2 per cent over the past 12 months.

But expats and agents told The Sunday Times that Singapore rents are still cheaper than in cities such as Hong Kong, Tokyo, London and New York.

A new survey by ECA International, a human resource consultancy, showed that rents here were 45 per cent less than the average price in Tokyo and 40 per cent less than in Hong Kong.

Singapore was the eighth most expensive place to rent a three-bedroom flat in Asia and 15th most expensive in the world – below Hong Kong, Tokyo, New York and London.

Investment banker Timothy Rice, who moved here last August, can testify to that.

Mr Rice, 27, pays $1,400 for a 350 sq ft studio in Kelantan Lane, near Bugis Junction. He said such a flat in an equivalent London location would still cost about the same figure – but in pounds. That is about $4,300.

Mr Masamitsu Kawasumi, 44, chief bank representative of the Development Bank of Japan, arrived here last month and was struck by the rental gap between Tokyo and Singapore.

Tokyo’s hip Roppongi area, with its many clubs and restaurants, has rents of about $13 per sq ft. Orchard Road’s $6 psf seems like a bargain.

Mr Thomas Preben Hansen, 32, chief executive of a listed marine firm, has lived in Shanghai and London: ‘Rents had become very cheap since 1997, and still have some catching up to do.’

He anticipated the rent squeeze and so bought a flat in Ewe Boon Road, off Bukit Timah Road, when he arrived in May.

A rental squeeze is exactly what Ms Isabelle Scali, 30, is bracing herself for. The public relations manager thinks Singapore is relatively more costly than London.

She pays $1,800 – nearly half of her salary – for a 1,200 sq ft flat at Sunshine Plaza off Prinsep Street.

In London, she said she spent just a third of her salary on a 700 sq ft studio flat in Balham, southwest London.

Ms Scali, who has signed a two-year lease, said rental costs will determine if she stays in Singapore.

Mr Rajesh Malkani, 43, who lived in Hong Kong for 13 years before moving here in 2005, said: ‘I don’t expect Singapore’s prices to reach Hong Kong levels because there is still land here. But I do expect them to go up.’

Mr Malkani, the global head of sales and business development at Standard Chartered, rents a 4,000 sq ft bungalow in Sunset Place. He would not reveal his rent but said it would get only half the space in Discovery Bay, which he feels is a comparable site in Hong Kong.

Given the decade-long property slump here, Mr Simon Smith, a senior director at Savills Asia Pacific, thinks rents will keep rising for the next one to three years.

But Mr Rice is not complaining: ‘Compared to Hong Kong, New York, London – Singapore is still cheap,’ he said.
 
Source : Sunday Times – 29 Jul 2007

Core central home rents up 12% in Q2

Some say that rentals for private homes islandwide have never risen so much from one quarter to another over the past decade.

Not surprisingly, it was the Core Central Region (CCR) – which includes prime districts 9, 10, 11, Downtown Core (including Marina Bay) and Sentosa – that posted the biggest increase in rents for condos and private apartments in Q2 over the preceding quarter. They rose 12 per cent.

But the buoyant demand for housing in the prime areas continued to filter down to the rest of the market in Q2, as reflected in a 10 per cent rise in URA’s rental increase for the Rest of Central Region (RCR) and a 9.4 per cent hike in the Outside Central Region (OCR).

OCR covers suburban mass-market locations like Woodlands, Clementi, Jurong, Hougang, Tampines and Bedok, while RCR includes areas like Bukit Merah, Queenstown, Geylang, Toa Payoh and Katong.

Knight Frank said that, based on its research, rentals for properties in the East Coast, Thomson and Bishan areas grew by a strong 10 to 12 per cent quarter-on-quarter in Q2 this year, matching the rental growth seen in the CCR.

‘Noticeably, more foreign companies and expatriates are becoming more concerned with rising housing rentals and costs. Nonetheless, their top priority is to be able to enrol their children in international schools here, where the supply of teachers and space for students is far more inelastic when compared to rental properties,’ Knight Frank director (research & consultancy) Nicholas Mak said.

URA’s 12 per cent rental index hike for the CCR in Q2 was much higher than a 7.6 per cent gain registered in Q1.

CB Richard Ellis executive director Li Hiaw Ho said: ‘The slew of en-bloc sales in the past two years being concentrated in the CCR has led to a shortage of apartments for rent in the region, as reflected in this region leading the pack in terms of the increase in the rental index for non-landed properties in Q2.

‘This uptrend is expected to continue as developments which have been collectively sold give way to redevelopment. Some of the major en-bloc sales in the prime area in Q2 include Leedon Heights, Himiko Court, Elmira Heights and Fairways Condominium.’

URA’s overall rental index for private homes in Q2 was up 10.4 per cent from the preceding quarter, and 31.2 per cent higher year-on-year.

‘This is the highest quarter-on-quarter, and year-on-year growth since URA made rental data available to the public. Nonetheless, as of Q2 2007, private residential property rentals are still about 21.4 per cent lower than the all-time high in Q1 1996,’ said Knight Frank’s Mr Mak.

Source : Business Times – 28 Jul 2007

Private homes: Rents up 10.4% in 2nd quarter

ALL private home owners have good reason to celebrate these days, but landlords should really pop the champagne – while their tenants should drown their sorrows.

Rents rose at an unprecedented rate in the April to June period, outpacing home prices which were far from sluggish.

Official figures showed yesterday that rents jumped 10.4 per cent in the quarter, trumping the 7.6 per cent rise in the first three months of the year. They are now 31.2 per cent higher than a year ago.

This is the highest quarterly and yearly growth since the Government made rental data public, said property firm Knight Frank. It is also the first time private home rents have shown double-digit growth in a quarter, it added.

Rents this year have gone up 18.7 per cent, compared to only 14.1 per cent in the whole of last year, added consultancy CB Richard Ellis.

More important, rents rose across the board, according to new Urban Redevelopment Authority (URA) figures yesterday.

Although the core central region still led the pack with a 12 per cent jump over the first quarter, the rest of Singapore was not far behind.

Rents in the city fringe areas went up 10 per cent while those in suburban districts were just behind with a 9.4 per cent rise.

Knight Frank’s latest data shows that homes in the East Coast, Thomson and Bishan areas saw rents rise by 10 to 12 per cent, matching the pace in the prime districts.

But while landlords enjoy the bubbly, their tenants are far from happy with surging rents becoming a source of concern among foreign companies bringing in growing numbers of expats.

To help tenants get a better idea of the market, the Government yesterday released data on median home rentals, breaking it down for the first time by project.

This allows potential tenants to compare median rentals – that is, the level at which half the rentals are higher and the other half lower – of individual condominiums.

The figures showed that The Pier at Robertson, for instance, commands a median monthly rental of $6.30 per sq ft (psf), or $3,150 for a 500 sq ft unit. At the other end of the spectrum, Neptune Court has median monthly rentals of $1.56 psf, or $1,560 for a 1,000 sq ft apartment.

This new data is available on the URA website. The agency also took pains to point out that while median rents overall rose to $2.17 psf per month, there were ‘a significant number of properties which were rented out at below $1.50 psf per month’.

Also, while rents are soaring, they are still some 21 per cent lower than the 1996 high, said Knight Frank.

The key reason for the rental rebound is the slew of collective sales, said experts. And as more and bigger estates are torn down, rents can be expected to surge further as displaced owners and tenants look for hew homes.

Similarly, private home prices are set for a good run.

They jumped 8.3 per cent in the second quarter to hit a level not seen since 1997. But what raised eyebrows was that prices of non-landed homes in the city-fringe areas outpaced those in red-hot prime districts.

Even in suburban areas, prices climbed 7.2 per cent – well above the 2 per cent rise in the previous quarter.

Perhaps most significantly, prices of completed homes rose more than those of uncompleted ones for the first time in at least two years.

This is a sign that the strong price rebound is due to genuine buying demand, said property consultants. Traditionally, prices of uncompleted homes tend to lead price increases because more people want to buy new homes.

Source : Straits Times – 28 Jul 2007

First-time URA data confirms soaring prime office rents

The Government has released office rental figures by location for the first time, confirming what the industry already knows – prime office rents have shot up by much more than the rest of the market.

Yesterday, it revealed median rents for two categories of offices: prime office buildings, which are highly sought-after and command high rents, and all other offices on the island.

The Government’s prime office category consists of 22 top-end buildings downtown and in Orchard Road, which are fairly new in appearance and have large floor plates. While it did not give any examples, the list is likely to include top-grade buildings like Republic Plaza in Raffles Place.

In these offices, median rents of new leases rose by 13.9 per cent to $10.33 per sq ft (psf) per month in the April to June period.

For the rest of the office market – comprising more than 2,000 buildings that make up 80 per cent of Singapore’s office space – median monthly rentals went up by 8.9 per cent to reach a much more modest $4.90 psf.

These lower rents are ‘more reflective of the typical rental paid by office tenants in Singapore’, the Urban Redevelopment Authority (URA) was quick to note in its statement.

As Singapore undergoes an acute shortage of prime office buildings and growing demand from expanding businesses, office rents have jumped to a level that some fear may threaten the Republic’s competitiveness.

And this is why the URA has been anxious to provide more transparency as to exactly how much typical businesses are paying for office space.

Property experts said the URA’s rental breakdown more accurately reflects Singapore’s tiered office market and makes official data easier to compare with figures published by property firms, who use similar categories.

Yesterday’s data also showed that while office rents may be climbing, as a whole they are still nowhere near the top asking rents recently reported in some buildings. At 6 Battery Road, for instance, asking rentals have reached $18.50 psf per month.

‘The pace of rental increases has been maintained but may not be as high as the landlords wish us to believe,’ said Mr Colin Tan, associate director at Chesterton International. ‘But it cannot be denied that rents are increasing…We should be more worried about the future.’

Indeed, the rise in rents is still gaining speed. Across the island, rents were up 11 per cent in the second quarter, on top of the 10.4 per cent increase in the previous three months.

Similarly, prices of offices that are bought, as opposed to rented, are going up. They rose 8.9 per cent in the second quarter, more than double the 4.3 per cent rise in the first quarter.

As office rents and values climbed, vacancy rates dropped across the board. They have now shrunk to 8 per cent, a level not seen since 1996, said property firm Knight Frank.

By office type, vacancies fell to 5 per cent in the prime category, and to 8.7 per cent for the rest of the market.

Market experts expect the office shortage to continue into next year and boost rents and prices further.

The office squeeze has boosted industrial property, which some companies have turned to for cheaper offices. This pushed up prices of multiple-user factory space by 8 per cent in the second quarter, double the 4 per cent rise previously. Rents rose 6.1 per cent, from 4.6 per cent.

As for shops, rents rose by 7.1 per cent in the second quarter, compared to only 1.4 per cent in the first quarter. Prices went up 4.6 per cent, from 1.7 per cent in the first three months.

The URA also gave median monthly rents of shops by location.

Source : Straits Times – 28 Jul 2007

Rising rents may blunt business edge

Businessmen have more to think about, following the rise in rentals for office, retail and industrial space. In the second quarter of the year, office space rentals climbed 11 per cent, up from the previous quarter’s 10.4 per cent.

For the first time, the Urban Redevelopment Authority (URA) released two sets of figures to reflect the two-tiered office market.

Category 1 includes office spaces in the downtown core and Orchard Planning area, while Category 2, comprising 80 per cent of all office space, accounts for the rest of Singapore.

The median rental for Category 1 was $9.50 psf monthly, up from $8.48 psf in the first quarter. In Category 2, the rates climbed from $4.23 psf to $4.48 psf.

“The pace of rental increase is maintained but maybe not as high as landlords wish us to believe,” said Mr Colin Tan, Chesterton International’s head of consultancy and research.

The vacancy rate continued to fall, from 9.1 per cent to 8 per cent by the end of the second quarter.

While an extra 641,000 sq m of office space will be available by 2010, Mr Tan said: “The supply is not much because historically, we have been able to absorb up to 4 million sq ft of space in good years,” he said.

In the retail sector, overall rentals increased by 7.1 per cent, a sharp rise from the 1.4-per-cent increase in the first three months of the year.

Median monthly rentals for shop space in Orchard were $9.24 psf. Rentals in city areas outside Orchard reached $6.21 psf and beyond the city area, $4.88 psf.

Although 221,100 sq m of factory space were granted temporary occupation permits in the second quarter, the industrial sector experienced cost spikes too. Rentals for multiple-user factory space increased by 6.1 per cent.

As for the seven-fold increase in demand for business park space, Knight Frank said this was “a spillover effect from the tight office market and an rise in the relocation of value-added manufacturing facilities from other countries”.

Mr Tan said: “The performance numbers show that the market is still moving forward, but that also means Singapore is slowly losing its competitiveness if these rises are not checked.”

Up to 515,000 sq m of gross floor area for shop space is expected to be completed by 2010. Similarly by then, 280,000 sq m of industrial space is expected to be introduced.

For now, the rise will not lead to businesses packing their bags for cheaper pastures. “Business costs does not consist of only rental costs. There is labour, material, utilities, transport, and so on,” explained Knight Frank’s Mr Nicholas Mak.

Source : Weekend Today – 28 Jul 2007

Expats moving to cheaper areas as prime rents soar

BUSINESS is booming for moving companies in Singapore as soaring rents force expat families to bail out of pricey areas in favour of cheaper outlying suburbs.

Demand is so great that some executive relocation firms are reporting a 15 to 25 per cent increase in charges and double the volume of business from last year.

The expat outflow has been most notable in blue-chip districts such as Holland Road, Bukit Timah and Tanglin, where rents have gone through the roof.

Average flat rents in districts 9, 10 and 11 – which include the upscale Orchard/Cairnhill, Tanglin/Holland Road and Newton/Bukit Timah enclaves – have rocketed by 36 per cent in a year, said real estate consultancy Savills Singapore.

Renting a unit at the posh Ardmore Park condominium now costs $17,000 to $19,000 a month, for example.

Rental increases started biting in March, sparking a house-hopping surge that has swamped moving companies serving the corporate accounts of multinational corporations (MNCs).

One company reported that the volume of moves has doubled from a year ago.

Asian Tigers K.C.Dat, which specialises in relocating executives of MNCs, is finding it hard to cope with the growth in business.

‘The volume of local moves is double what we handled last year, and this is after we turned away an equal volume because demand was just too high,’ said group general manager John Lim.

Most of those moving are ‘high-end executives, with rental budgets of $8,000 to $15,000 a month’, he added.

Another relocation specialist, UniGroup Worldwide UTS Singapore, said its volume of local moves began to surge in March, when it was 35 per cent higher than the same time last year.

By June, UniGroup’s monthly volumes of local moves were up 86 per cent year-on-year.

‘Nearly 80 per cent of the increase in local moves can be attributed to expatriates moving from districts 9, 10, and 11 to outlying areas such as Upper Bukit Timah, Ang Mo Kio or locations along the East Coast,’ said the company.

As well, Crown Worldwide has enjoyed a 30 to 35 per cent increase in the number of local moves for expat families.

Its general manager for household goods, Mr William Lee, said: ‘We have seen several cases where people moved because they couldn’t afford to live at the same place any more.’

The expat musical chairs occurs mostly at the end of the month, when residential leases usually end.

Expats are being caught in a classic supply-demand squeeze. Singapore’s recent rush of collective sales – where entire condominiums are bought by developers to be torn down and redeveloped – is slashing the supply of rental flats in choice districts, while the booming economy is drawing in more expats and so pushing up housing demand.

‘Low vacancy levels, coupled with strong demand from overseas staff as well as from tenants and owners displaced by collective sales, are expected to translate into rising rents over the short to medium term,’ said Mr Simon Hill, regional director of residential leasing at Savills.

‘We note that there is little room for negotiation on asking rents,’ he added.

The trend looks unlikely to ease soon, with Savills predicting a 15 to 20 per cent increase in luxury home rents over the rest of the year, ‘while rents in fringe/ suburban areas will follow suit, benefiting from the spillover demand’.

‘We are also likely to see a growing number of expatriates choosing to buy rather than rent.’

Source : Straits Times – 27 Jul 2007