Serious Where have all the tenants gone? Long time passing, where have they all gone

http://news.asiaone.com/news/business/high-vacancy-rates-parts-singapore

High vacancy rates in parts of Singapore

The high vacancy rate is not just an affliction of Sentosa Cove.

Mr Jose Trinidad, who lives at The Shore Residences in East Coast, said many of the 408 units in the six 20-storey towers are left empty for long periods of time. The development was completed in 2013.

The 38-year-old Filipino expatriate who works as an auditor added: "Most of the people living here are renting and the competition for tenants is very high nowadays. Many units are empty because the landlord just cannot find tenants."

A check online showed that 90 units were for sale and 55 for rent. It is unclear how many of these units are vacant.

According to the latest Urban Redevelopment Authority (URA) data, there were 29,197 vacant private homes out of 348,080 available units around Singapore in Q4 2016 - a vacancy rate of 8.4 per cent.

While not as high as the 8.9 per cent in Q2 2016 - a 16-year record at the time - R'ST Research director Ong Kah Seng said it is still cause for concern.

He said the drop in vacancies may be due to landlords cutting rentals to attract tenants. "This is not backed by solid leasing and economic fundamentals," he added.

The Q4 2015 and Q4 2014 vacancy rate was 8.1 and 7.8 per cent respectively.

It did not help that last year, there was a large supply of private homes - an estimated 20,000 units were completed last year, compared with the 18,971 units in 2015 and 13,150 units in 2014.

Said Mr Ong: "High vacancy rates in 2016 are overall propelled by a combination of factors - substantial new private residential completions, and continued muted leasing interest amid crimped or no housing allowances by many foreign professionals."

International Property Advisor chief executive Ku Swee Yong said the rapid increase in dwelling units is not matched by population growth. "The reason is simply oversupply," he added.

Experts said there could also be more owners who do not live in Singapore on a permanent basis, and prefer not to rent out their units. It could be because the owners cannot find tenants or do not want to lower rents, said Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants.

Mr Tan added: "The fact that there are many unoccupied units means that the majority of owners of units that have been completed over the past few years were speculators or investors, and not owner-occupiers."

Agreeing, Mr Ong said some owners may also be wary of a mismatch between the maintenance costs in renting out their units, and lower rents. "These could be locals who do not want to rent out their units because of the weak rents now and are afraid of tenants damaging their unit."

Story of Singapore. We always struggled more than most in this department. The people behind the policies and the developers reside in GCBs.

Its a bit rich to focus on giving all the PMET jobs to beggars from 3rd world countries who will work for 60-70% less.

Then expect those buggers to rent your apartments….they are all sharing….4-5 people to an apartment.

they have been building condos nonstop in every nook and cranny in tanjong rhu,mountbatten,meyer rd,amber rd,katong and marine parade for the past 8 to 10 years and now they are wondering why there are so much vacancies?only one word for it.....greed and gluttony.

everyday for the past 8 years all i see is dump trucks and cement trucks rumbling thru and from fort rd and ecp and endless banglas and construction work expanding roads,tearing down parks,building more condos,this country has become an island of meaningless construction activity like Michael Barr said.
the oversupply should have been apparent years ago when they started building those condos near the parkway parade ring road and those funky shoebox condos at katong,finding the weirdest spots and locations where they can squeeze in,tearing down katong v,practically every strip of road i can think of from katong to marine parade to amber rd down to mountbatten and fort rd is filled with these newly build condos in the past 8 years........

i hope this fucking retarded island sinks into the sea and those who bought these retarded condos crash and burn.

Wasn't there a whole bunch of India fucking shitskins looking for places to rent????

and this is why Pap's 10 million population is inevitable

frenchbriefs said:

they have been building condos nonstop in every nook and cranny in tanjong rhu,mountbatten,meyer rd,amber rd,katong and marine parade for the past 8 to 10 years and now they are wondering why there are so much vacancies?only one word for it.....greed and gluttony.

everyday for the past 8 years all i see is dump trucks and cement trucks rumbling thru and from fort rd and ecp and endless banglas and construction work expanding roads,tearing down parks,building more condos,this country has become an island of meaningless construction activity like Michael Barr said.
the oversupply should have been apparent years ago when they started building those condos near the parkway parade ring road and those funky shoebox condos at katong,finding the weirdest spots and locations where they can squeeze in,tearing down katong v,practically every strip of road i can think of from katong to marine parade to amber rd down to mountbatten and fort rd is filled with these newly build condos in the past 8 years........

i hope this fucking retarded island sinks into the sea and those who bought these retarded condos crash and burn.

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your posts are always logical and made sense, keep cool bro,
all of us locals help should start to do something if its within our means to help our own locals,
for a start, when i retired this year i asked my manager to please employ back a local sporean to take over my post and he agreed,
i told him it would help a singaporean family greatly, (since the salary is almost 5 figures)


all the bros here, please do whatever little you can to help back our own ppl, who serves NS


thanks

frenchbriefs said:

i hope this fucking retarded island sinks into the sea and those who bought these retarded condos crash and burn.

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UOL just purchased the Ban Nee Chen plot along Amber area for 156 mil, guess what will be in place of the nursery?

Condo is for speculation, not for stay. Silly sinkies dunno the game.

My neighbourhood kopi kaki, who stays here in Malaysia but survive via rentals from 4 properties in zikapore is desperate. Only one is rented out and this last tenant has given him notice of his deployment to China in April. Cannot afford empty property because only one is fully paid up ( a walk up apartment at Novena). He curses lhl and the pap on a daily basis for killing the shipping business as all his tenants are sourced from his bunkering / chandler contacts.

frenchbriefs said:

they have been building condos nonstop in every nook and cranny in tanjong rhu,mountbatten,meyer rd,amber rd,katong and marine parade for the past 8 to 10 years and now they are wondering why there are so much vacancies?only one word for it.....greed and gluttony.

everyday for the past 8 years all i see is dump trucks and cement trucks rumbling thru and from fort rd and ecp and endless banglas and construction work expanding roads,tearing down parks,building more condos,this country has become an island of meaningless construction activity like Michael Barr said.
the oversupply should have been apparent years ago when they started building those condos near the parkway parade ring road and those funky shoebox condos at katong,finding the weirdest spots and locations where they can squeeze in,tearing down katong v,practically every strip of road i can think of from katong to marine parade to amber rd down to mountbatten and fort rd is filled with these newly build condos in the past 8 years........

i hope this fucking retarded island sinks into the sea and those who bought these retarded condos crash and burn.

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and property developers are expecting at least $1,500psf for these east coast condos. who so stupid to buy?

mojito said:

Condo is for speculation, not for stay. Silly sinkies dunno the game.

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first one for staying. the remaining for speculation and flipping.

Reddog said:

My neighbourhood kopi kaki, who stays here in Malaysia but survive via rentals from 4 properties in zikapore is desperate. Only one is rented out and this last tenant has given him notice of his deployment to China in April. Cannot afford empty property because only one is fully paid up ( a walk up apartment at Novena). He curses lhl and the pap on a daily basis for killing the shipping business as all his tenants are sourced from his bunkering / chandler contacts.

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Just curious, who did he vote for ?

bushtucker said:

first one for staying. the remaining for speculation and flipping.

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What happen in Chibi during 3 kingdoms period you know or not? You get burnt cannot blame others hor!

mojito said:

What happen in Chibi during 3 kingdoms period you know or not? You get burnt cannot blame others hor!

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cao cao chained his ships together and all were burnt down at the same time

Wow...Can buy soon...Price drop....

Indicators are pointing to housing oversupply, while the vacancy rate for private homes is approaching recession levels. But property prices have remained firm. Channel NewsAsia asks property analysts why the rising supply has not resulted in a proportionate fall in prices.

SINGAPORE: The growing vacancy rate in the private housing market is something property developers have been harping on for the past couple of years. At 8.9 per cent, official data shows the vacancy rate for private residential units at a 16-year-high, nearing levels seen in the aftermath of the 1997 Asian financial crisis.


Based on a March report by property firm Colliers, the number of mortagee sales – at 70 in the first quarter of this year – have reached levels registered during the 2008 global financial crisis.


But even as the indicators point to housing oversupply, property prices have remained firm. Just last week, Monetary Authority of Singapore managing director Ravi Menon said it was “too early” to lift property cooling measures, as prices have adjusted "only modestly" after a run-up that was stronger than that of income growth.


Why has rising housing supply not resulted in a proportionate fall in housing prices? Property analysts Channel NewsAsia spoke to said there are three main reasons.


DIFFERENCE BETWEEN RECESSION AND SLOWDOWN


The key difference between the current economic slowdown and the previous downturns is that we are not in a full-blown recession, analysts said.


“The current slowdown in the property market is mainly caused by government policies, not due to a recession,” said Mr Nicholas Mak, head of research and consultancy at SLP International, noting that with unemployment remaining low, and banks still extending loans, private home prices “have not fallen much”.


According to the Urban Redevelopment Authority’s private home prices index, prices have only fallen 9 per cent over three years since peaking in the third quarter of 2013. The magnitude of this decline is small, compared to the 62 per cent ramp-up of prices over a four-year period between 2009 and 2013.






Property Price Index by type of property. (Graph: Adapted from URA)

Mr Colin Tan, director of research and consultancy at Suntec Real Estate Consultants, also pointed out that investors hold most of the unsold or vacant properties. “They are not so highly leveraged due to cooling measures. So overall, there is nothing yet to tip the balance,” he said.


“In many cases, especially for the high-end (properties), a deep cut is necessary to reach affordability levels of home owners. As conditions are not so dire now to warrant a deep cut, everyone is holding on to their positions as small cuts don’t really move sales,” he explained.


Mr Ong Teck Hui, National Director of research and consultancy at JLL Singapore, also observed that the current situation is less severe compared to the recession in 1997 to 1998, where there was “more widespread pressured selling by home owners and developers”.


“The unemployment rate in 1998 reached a high of 3.4 per cent from an average of 1.4 per cent in 1997, while today it is at 2.1 per cent, up slightly from the average of 1.9 per cent in 2015,” he added.


However, other market watchers like DBS economist Irvin Seah pointed out that the concept of a recession is a technical one. He noted that economic growth in the second quarter was largely supported by the biomedical cluster, and that some parts of the economy, like certain manufacturing sectors, have been in recession mode for quarters on end.


“To clear the private housing supply, prices have to fall, but for this to happen, interest rates have to go up,” said Mr Seah.


ULTRA-LOW INTEREST RATES


The unusually long period of ultra-low interest rates is a global phenomenon that has distorted financial markets, and drawn savers and investors to property assets. But it has affected a small and open economy like Singapore much more.


“This is why the Monetary Authority of Singapore implemented the TDSR (Total Debt Servicing Ratio) framework in 2013,” said Mr Ku Swee Yong, CEO of property firm Century 21 Singapore, referring to the Government’s move to curb excessive investment and leverage in non-productive assets like property.


Because Singapore uses the exchange rate to manage its monetary policy, it does not control its domestic interest rates. Instead, borrowing costs are mainly determined by US interest rates and investors' outlook on the Singapore dollar.


Home loans rates, which are usually benchmarked against the three-month Singapore interbank offered rate (Sibor), are currently hovering as low as 1.2 per cent, as the US Federal Reserve holds off on rate hikes in a slowing global economy. This is compared to the situation in 1998, where the three-month Sibor reached nearly 8 per cent.






Historical three-month Singapore Interbank Offered Rate. (Sources: MAS, Tradingeconomics.com, Mortgagewise.sg)

“The tipping point is global interest rates. When will the US and other global economies raise rates back to normal? If we can’t see this happening in the near future, expect more gradual price declines for many, many more quarters,” said Suntec Real Estate Consultants’ Mr Tan.


SLP’s Mr Mak also said that the prolonged period of low interest rates has contributed to a slow price decline, “as some owners are not pressured to sell their investment properties despite the low returns”.


“If the mortgage rates were higher, more property investors could be forced to sell and exit the market,” he said.


“There will come a point where the discussion is no longer about interest rates and investors’ holding power, but about the lack of rental income due to the vacancies,” said Century 21’s Mr Ku.


“This will hit people who buy (property) with cash to make mortgage repayments, but to a greater extent, people who buy with the expectation of using rental income to service those repayments.”


MORE PRIVATE HOMES WILL BE COMPLETED IN 2016


A third reason for the relatively small and gradual price decline is that peak oversupply of private homes is a situation that is still in the midst of unravelling, said Mr Ku.


According to URA data, about 20,000 private residential units will be completed and ready for occupation this year. This number tapers off in 2017 and beyond.






Pipeline supply of private residential units and Executive Condominiums by expected year of completion. (Graph: URA)

“The highest volume of private homes reaching the TOP (Temporary Occupation Permit) issuance stage happens this year. That’s when you receive your keys, that all your bank loans are drawn down, and you are suffering the maximum payout while holding a vacant unit. So we are standing on the precipice now,” he explained.

The present vacancy rate of 8.9 per cent translates to a stock of 30,310 vacant private residential units. SLP’s Mr Mak noted that this data-point lacks granularity, as it does not differentiate between unsold vacant units and units which are sold but yet to be occupied.


But Century 21’s Mr Ku said that the fact that the total stock of vacant private homes is at an all-time high – in the midst of a weakening global economy – is troubling in itself.


“This number (30,310 vacant units) is unprecedented. It will be exacerbated by the completion of properties in 2016 and 2017, the weaker employment situation, and the clampdown on foreigner inflow. My forecast is for vacancies to reach 45,000 units in 2018. Rentals will be very weak,” he said.


Mr Ku added it had been relatively easier to clear previous housing gluts in the 2000s, partly because Singapore’s population boomed as the country opened up to immigration and foreign investment, via tourism and financial services. “Today, we face limits in opening our markets any further.”


But others, like JLL’s Mr Ong, disagreed with the sombre assessment. “It does not mean that the market has to be cleared of supply for it to recover,” he said.


“At any time, there will always be supply on the market in terms of unsold stock. For example when the market turned around in mid-2009, there were more than 38,000 unsold uncompleted units while the figure as at mid-2016 is about 21,500.”

- CNA/ll

http://www.channelnewsasia.com/news/business/private-homes-puzzle-why/3014552.html