Private residential property transactions up 20% in Q3
By Yasmine Yahya
SINGAPORE: The third quarter saw a strong surge in Singapore’s private residential market, as transaction volumes rose 20 per cent over the previous quarter.
Property consultancy Savills said some 11,000 units were sold between July and September, mostly in the mass market and mid-tier sectors.
Projects such as The Gale at Flora Road, Hundred Trees at West Coast and Optima at Tanah Merah benefited from this buying interest.
On the other hand, the high-end sector saw volumes easing off in the third quarter, due to a limited number of launches and the implementation of cooling-off measures by the government.
On the back of buoyant sales, private property prices surged 15.8 per cent in the third quarter - the sharpest quarterly rise in 28 years.
Even in the high-end sector, prices recorded a second straight increase, despite being about 22 per cent below the previous peak in the fourth quarter of 2007.
Savills said it expects transaction volumes in the private residential sales market to slow in the next few months, as there will be fewer major launches and buying activity tends to ease during the year-end holiday season.
Nevertheless, island-wide home prices are expected to firm, with a moderate increase from the third quarter to the last.
Meanwhile, the office vacancy rate rose to 12.5 per cent in the third quarter, up 2.5 percentage points from the second quarter, as 1.25 million square feet of new office space was completed.
Savills said net supply now outstrips net demand by some 1.2 million square feet. It said companies remained cost conscious in the third quarter despite the better economic outlook.
As a result, leasing activity was largely led by relocating tenants who were seizing the opportunity to move to new office buildings that offered competitive rental packages.
The average Grade A asking rents continued to slide by 9.4 per cent on quarter, to S$9.30 per square foot per month.
Faced with intense competition from new buildings, Savills said existing office buildings in the core Central Business District area saw asking rents tumbling at double digit rates.
Looking ahead, Savills said the gradual return of business confidence will lead more companies to expand or to revisit their space planning needs, resulting in an increase in leasing demand.
It said with the completion of over one million square feet of office space in the next six months, the leasing market will be led by opportunistic expansions, renewals and flight to quality by companies taking advantage of the weak rental environment.
As a result, take-up in new buildings may be at the expense of older ones putting downward pressure on their rents.
Savills expects Grade ‘A’ rents to fall by another 10 to 15 per cent in the next six months.
- CNA/sc
Source : Channel NewsAsia - 09 December 2009
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