Something is brewing. There are reports saying that the overall vacancy rate in private residential properties are high now. What is the cause of this? Let us do some digging.
It is understood that the supply of new private homes in pipeline are coming up in bulk with interests continuing to be muted.
Straits Times reported that the vacancy rate of private condominiums and residential apartments are high because of a few different reasons – the main cause being that a substantial amount of new completions are due in the next few months of 2017. From the data acquired from Urban Redevelopment Authority (URA), we can see that there were 348,080 private homes available in Singapore and 29,197 were unoccupied in the last quarter of 2016. That would translate to a vacancy rate of 8.4 percent. Is that really high?
Apparantly, this 8.4 percent is still lower that the 8.9 percent recorded in the 2nd quarter of 2016 – which was all time high in 16 years. But R’ST Research Director Ong Kah Seng, who remains worried about the elevated vacancy level says that it still exceeded the 7.8 percent and 8.1 percent seen in the final quarters of 2014 and 2015.
What’s the cause?
The main cause of this situation is largely due to the enormous supply of new private residences with 20,000 built in 2016 versus 13,150 units in 2014 and 18,971 in 2015.
“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,” noted Ong.
There is also another underlying reason behind this – Home owners are not willing to reduce their rental prices. But how true is this? Colin Tan, Director of Research and Consultancy at Suntec Real Estate Consultants is saying that 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 either speculators or investors.
The Shore Residences
One might have heard that many apartments at The Shore have been vacant for substantial duration. This is in fact verified by tenants putting up at The Shore Residences. Jose Trinidad, a Filipino expatriate staying in the 408-unit residential project completed in 2013 – “Many units at The Shore Residences in the East Coast have been left vacant for long periods of time.”
“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,” noted the 38-year-old auditor.
An online check revealed that there are currently 55 units for lease at the project and 90 up for sale, but it is unknown how many of them are unoccupied.