Overall property prices here have been holding up very well.ST PHOTO: LIM YAOHUI
The Covid-19 pandemic is affecting the property market here in ways not seen in previous recessions.
Despite many workers facing income and job cuts, prospective bargain hunters have been sorely disappointed, because overall property prices here have been holding up very well.
Indeed, even the authorities have had to step in to rein in a rising trend of people who simply make bookings at new property launches without first ascertaining that they are financially able to make the purchase.
Since late September, buyers have had to confirm the purchase of the booking within the validity period, or risk losing a substantial sum - 25 per cent of their deposit. For example, they will lose $12,500 if the property is worth $1 million.
What about the investment outlook for properties - is the rental market still holding up well enough to benefit landlords?
In past recessions, rentals fell. For instance, the 2009 global financial crisis saw a drop in rental values of between 10 per cent and 40 per cent for all properties.
In a surprising twist, there is both good and bad news in store for landlords now, and this largely depends on where their properties are located.
What is unusual this time is that the rental market appears to be influenced by the movement and income of people and how they are affected by the pandemic, as opposed to massive losses in various financial-related investments.
According to Ms Christine Li, who heads the research services team of Cushman & Wakefield (Singapore & South-east Asia), the median rental price for private apartments in District 22, which covers Tuas, Jurong and Boon Lay, has seen the biggest drop of 5.2 per cent to date.
This is unsurprising, considering that these places are the preferred choice of rental for many Malaysian employees who work in companies there.
With the exodus of these tenants back to their country, the average rental for a 1,000 sq ft apartment has slipped to about $2,900 a month, from over $3,000 last year.
5.2% Drop in the median rental rate for private apartments in District 22, which covers Tuas, Jurong and Boon Lay - the biggest drop.
5.7% Rise in average rent in the Beach Road, Bugis and Rochor areas (District 7).
Following a similar trend, the rental in District 2, which covers Chinatown and Tanjong Pagar, also eased by 4.1 per cent, probably due to the departure of foreign professional, manager, executive and technician tenants. So a 1,000 sq ft apartment in this district now fetches a median rent of $5,100, down from about $5,400 from last year.
The other areas that saw rental dropping, at around 3.8 per cent, are District 6 (City Hall and Clarke Quay), District 8 (Farrer Park and Serangoon Road) and District 11 (Newton and Novena).
What about the rental for apartments in the prime districts of 9 (Orchard Road and River Valley) and 10 (Tanglin, Holland and Bukit Timah), where some of Singapore's most luxurious condominiums are located? The units in District 10 have seen rental drops of about 3.4 per cent, but those in the Orchard Road area have been affected only marginally - at 1.6 per cent.
For instance, the asking rent for two-bedroom units in Scotts Road and Bideford Road - which are within minutes' walking distance from Orchard MRT station - is still hovering at $7,000 today.
THE HOTTEST RENTAL UNITS
If you currently own investment units in the Beach Road, Bugis and Rochor area (District 7), you are in for a bonus because the average rent there has actually gone up by 5.7 per cent. This means that a tenant who used to pay a monthly rent of $4,100 there now has to fork out $300 more for the same unit.
That said, the monthly rent for a good two-bedroom unit in the Beach Road area, which is within walking distance of good shopping malls and MRT stations, is still considerably cheaper - at about $5,000 - than those near Orchard Road.
There are many three-bedroom units in mature estates - like Bishan, Toa Payoh, Bukit Merah and Marine Parade - that are going for between $2,000 and $3,000 in rental.
Other areas that have seen rent rising - between 3 per cent and 4 per cent - are District 3 (Alexandra and Commonwealth), District 12 (Balestier and Toa Payoh) and District 14 (Eunos, Geylang and Paya Lebar).
A reason for the slight increase is probably due to the completion of new projects in the areas - the rental of these new units is likely to have pushed up the overall rental rates.
Ms Li noted that not all tenants are hard-pressed to pay more rent.
"The wealthy expatriates who invested in tech stocks are even richer now than before the pandemic. As such, they are still able to pay high rents, which has resulted in rental gains," she said.
But before you take this as a positive sign to buy properties with the intention of using rent to cover your mortgage, note that the rental data does not take into consideration Housing Board flats, which offer much cheaper rates than private properties.
There are many three-bedroom units in mature estates - such as Bishan, Toa Payoh, Bukit Merah and Marine Parade - that are going for between $2,000 and $3,000.
Also, it is a fact that many foreign tenants have already left Singapore due to the current job crunch.
A long-time property investor, who wants to be known only as Mr Wong, has two apartments in the city area for rent now after both foreign tenants left suddenly.
Both units have been left vacant for over four months, but Mr Wong is prepared to wait it out since he has no outstanding mortgage.
"I have an advantage over newer condos as my units are bigger and in a central location. If needed, I am prepared to cut rent too, since I have nothing to lose," he said.
Source: The Straits Times