ERA Daily Research - 10 June

Condo, HDB rents continued to rise in May despite tighter Covid-19 curbs

The Straits Times, 9 Jun 2021, Wed    

By Michelle Ng

The rental market for both private apartments and Housing Board (HDB) flats in May remained robust despite the tightened Covid-19 measures and border restrictions in place.

Rents for condominium units rose by 0.3 per cent compared with the month before and are up 7.3 per cent from a year earlier. They are still down 11.4 per cent from their peak in January 2013, according to flash data from real estate portal SRX released on Wednesday (June 9).

HDB rents saw a slightly higher increase of 0.7 per cent in May compared with April and are up 7.9 per cent from a year before. However, they are still 9.2 per cent off their highs in August 2013.

With the May increases, condo rents extended their rise to five consecutive months, while HDB rents climbed for 11 straight months.

The rise in rents for HDB flats last month was broad-based, climbing for both mature and non-mature estates, as well as all room types.

Huttons Asia chief executive Mark Yip noted that rents of HDB flats in non-mature estates have risen at a faster rate of 8.6 per cent, compared with the 7.2 per cent increase in mature estates.

"This could be due to tenants moving to non-mature estates where the level of amenities can be on a par or even better than some mature estates," he said.

ERA Realty head of research and consultancy Nicholas Mak said the increase in rents in both markets illustrates a healthy demand in the local leasing market, despite Singapore going into a month-long heightened alert phase, which is in place till June 13.

Unlike purchasing a property for own stay, Mr Mak said tenants are likely more willing to commit to a rental unit selected through online platforms, hence the reason why the leasing market was largely unaffected by the recent Covid-19 curbs.

"Most leasing contracts have a shorter tenure around one to two years, while buying a property would require a longer commitment. The financial outlay for renting a property is also smaller compared to buying a property," he said.

Read more at: https://www.straitstimes.com/business/property/condo-hdb-rents-continued-to-rise-in-may-despite-tighter-covid-19-curbs

HDB rents up 0.7% in May, condominium rents rise 0.3%: SRX

The Business Times, 9 Jun 2021, Wed

By Lisa Kriwangko

RENTS for condominiums increased 0.3 per cent in May 2021 from the previous month, while that of Housing Development Board (HDB) flats rose 0.7 per cent in the same period.

This marks the fifth and eleventh consecutive month of rising condo and HDB rents respectively, according to Wednesday's SRX flash estimates.

According to Christine Sun, senior vice-president of research and analysis at OrangeTee & Tie, the market "remained robust" despite fewer foreigners entering Singapore, as tenants continued to renew their leases.

She said landlords may want to take advantage of recovering private resale prices by selling their flats, which means affected tenants will have to look for new accommodation.

More Singaporeans are also renting temporarily as some homeowners did not wait to find a replacement home before selling their flats as they wish to capitalise on rising resale prices, added Ms Sun.

Condominium rents increased by 7.3 per cent year-on-year (yoy), but are still down 11.4 per cent from their peak in January 2013.

This was led by a 9.7 per cent rise in the outside central region (OCR), followed by a 6.1 per cent increase in the rest of central region (RCR), and 5.1 per cent growth in the core central region (CCR).

Compared to April 2021, CCR and OCR rents gained 1.1 per cent and 0.5 per cent respectively, while RCR rents fell 0.6 per cent.

The month also saw a 1.7 per cent increase in volume to an estimated 4,603 units in May, compared to 4,527 units in April.

This is 39.3 per cent higher than rental volume from a year ago, and 0.1 per cent higher than the five-year average volume for the month of May.

According to Lee Sze Teck, director of research at Huttons Asia, this number was capped by Phase 2 (Heightened Alert) restrictions, which limited the number of visitors in a viewing.

"Otherwise, rental volume for condos in the month of May will be even higher," he said.

SRX data showed volumes were led by OCR with 41.2 per cent, followed by 30.7 per cent from RCR, and 28 per cent from CCR.

HDB rents increased by 7.9 per cent y-o-y, although this is still 9.2 per cent down from their peak in August 2013.

Rents in mature and non-mature estates climbed 7.2 per cent and 8.6 per cent respectively. All room types recorded rent increases - three-room by 7.3 per cent, four-room by 9.1 per cent, five-room by 7.2 per cent, and executive flats by 4.9 per cent.

That being said, HDB rental volumes declined by 0.9 per cent to an estimated 1,686 units, compared to 1,702 flats from the month before.

This is 8.5 per cent lower than the five-year average volume for the month of May, but 30.4 per cent higher than the rental volume in May 2020.

Some 36.8 per cent of the month's rental volume came from four-room apartments, 31.4 per cent from three-room, 24.8 per cent from five-room, and 7 per cent from executive flats.

Nicholas Mak, head of research and consultancy at ERA, said that while rental volumes remained "largely unchanged", resale volumes of both HDB flats and condos took a dip in May from a month ago.

He noted that HDB resale transactions dropped 16 per cent while that of condos fell 11.4 per cent last month.

According to Mr Mak, this was because of the shorter commitment period and smaller financial outlay of renting a property, as compared to purchasing one.

"Therefore, relatively more tenants are willing to seal rental transactions remotely, compared to property acquisitions, especially for certain popular locations," he said.

Source: https://www.businesstimes.com.sg/real-estate/hdb-rents-up-07-in-may-condominium-rents-rise-03-srx

BT Explains: Why office landlords aren't fretting over banks cutting space

The Business Times, 10 Jun 2021, Thu    

By Fiona Lam

THE trend of Singapore banks trimming office space is not spelling doom and gloom in the leasing market.

Who's been scooping up these workspaces, and which landlords have exposure to them? The Business Times takes a closer look.

Meet the new heavyweights

Singapore's banking sector will cut office space by 30 per cent over the next few years as office leases expire, a DBS report noted. But firms from other industries have been quick to pounce on these prime commercial units, often in prominent locations and boasting panoramic views of the city skyline.

Investors, developers and real estate investment trusts (Reits) thus appear scarcely concerned, and welcome the new mix of tenants. In particular, a technology, media, real estate and corporate blitz looks to be underway.

Citi analyst Brandon Lee expects the space vacated by banks to be filled up by tech and corporate tenants.

CBRE Research wrote recently that large corporates will probably leverage the pullback in rents to move to higher-quality and better-located offices, fuelling a recovery in the Grade A market.

At the Marina Bay Financial Centre (MBFC) Tower 1, tech firms from the US, China and Singapore are among those expressing "very strong interest" in roughly 200,000 sq ft across nine and a half floors.

Media companies and financial services providers are also keen on that MBFC space, which is part of the 400,000 sq ft currently leased to Standard Chartered, The Business Times (BT) reported. The UK bank's lease expires in October 2022, with an option for renewal.

Similarly, Keppel Reit is seeing demand from US tech and corporate tenants. In Singapore, the Reit owns a 79.9 per cent interest in Ocean Financial Centre, one-third of MBFC, a one-third stake in One Raffles Quay, and the entire Keppel Bay Tower.

Suntec Reit also has a 33.3 per cent exposure to MBFC.

Data from JLL Research showed that financial services' share of office space in new buildings across Singapore shrank from 47 per cent in 2004-2014 to about 26 per cent in 2015-2020.

In the same period, occupiers from the tech sector grew their footprint to 22 per cent of the market, up from 8 per cent. Real estate companies accounted for 13 per cent in 2015-2020, swelling from 3 per cent in 2004-2014.

Landlords unfazed, even optimistic

Keppel Reit, whose portfolio includes 10 big banking tenants taking up more than 40,000 square feet (sq ft) each, is confident of backfilling most of its potential vacancies, Citi's Mr Lee wrote.

It would be similar to how the Reit managed to fill former anchor tenant UBS Group's vacated space at One Raffles Quay, he said. TikTok owner ByteDance took up three floors spanning over 60,000 sq ft in the building, which is also jointly owned by Hongkong Land and Suntec Reit, after the Swiss bank moved out, Bloomberg reported.

Four of Keppel Reit's key banking tenants are reportedly looking to surrender their space, including DBS's about 75,000 sq ft in MBFC Tower 3, StanChart in MBFC Tower 1, and ANZ's one floor in Ocean Financial Centre.

Any downtime or "short-term income void" could be mitigated by positive rent reversions and S$467 million of undistributed capital gains, Mr Lee said.

Some investors are also maintaining a rosy view of the office leasing segment.

Blackstone Group plans to invest in more properties in Singapore due to "compelling opportunities for high-quality office spaces", the US private equity giant told BT when it acquired The Sandcrawler, a Grade A business-park building in Buona Vista.

This demand is driven by an influx of global tech companies setting up regional headquarters in the city-state. Such occupiers are keen to take up office space in low-rise buildings in business parks with a "unique campus-style experience", instead of skyscrapers in the CBD, Blackstone added.

Meanwhile, Hongkong Land, which owns a one-third interest in MBFC's commercial space, said it expects to achieve rents of between S$11 and S$12 per square foot (psf) per month for the StanChart floors that are being marketed.

That is above the average of S$10.40 psf per month during Q1 2021 in CBRE Research's basket of Grade A (Core CBD) office rents.

The Singapore office sector has seen improved supply-demand dynamics, Mr Lee said. Supply is limited, given the potential delays of two sizeable office buildings - in GuocoLand's Guoco Midtown and IOI Properties' Central Boulevard Towers - to 2023 and 2024.

First movers: Big Tech

Tech giants from the US and China, including ByteDance, have snapped up real estate in Singapore since last year. Lazada and its parent Alibaba Group signed up for 140,000 sq ft at 5One Central on Bras Basah Road. In May 2020, Alibaba bought a half stake in AXA Tower.

ByteDance's TikTok is also continuing to expand its physical footprint here, having leased two floors amounting to 58,000 sq ft at GuocoLand's Guoco Tower. The space previously housed Dentsu Aegis Network.

Amazon.com Inc took over three floors totalling 90,000 sq ft in Asia Square Tower 1 that Citigroup used to occupy.

Mr Lee noted that the fall in Singapore office demand from banks and co-working operators should be mitigated by Chinese tech demand, including expansion by "first liners" - Alibaba/Lazada, ByteDance and Tencent - which are already here, as well as "second liners".

Source: https://www.businesstimes.com.sg/real-estate/bt-explains-why-office-landlords-arent-fretting-over-banks-cutting-space

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