Rent of high-end homes might keep falling in the light of an increased supply and less generous housing packages for expatriates.
Luxury home rents have dipped by about 2 per cent in six months, according to GPS Alliance associate agency head Jack Teo, while as an OrangeTee agent said, some of his clients have had to cut rents by about 5 to 7 per cent to land a tenant.
Upscale projects such as The Orchard Residences, Cliveden at Grange and The Orange Grove have recently been completed and they have added to the number of units on the market.
Property agents said landlords asking for a monthly rent above $10,000 are currently finding it harder to find tenants.
Pressure on rents is also coming from cost-conscious firms putting expat staff on local terms. This means they no longer get a separate housing allowance but must budget for rent from their salaries instead.
‘Multinational corporations have lower budgets now so there’s no longer a separate housing package. And when a tenant has to budget out of his pocket, he is usually more sensitive to price and tends to want to spend less,’ said the OrangeTee agent.
The quieter market can also be partly attributed to a seasonal drop as expats usually look for homes from May to early July before the August school term starts.
Markus Tay of Luxe Group said it takes about 2 to 5 months to find a tenant for luxury homes now – about 30 per cent more time than 6 months ago. The market had started slowing then as the supply of homes started to enter the market.
Although landlords eager to score a tenant have cut rents, prices have not declined much overall as some owners have holding power and might be unwilling to budge from their initial asking price.
The luxury market might firm up again next year once the number of posh completions start to slow and the segment stabilises, he added.
Property experts said upscale homes are usually owned by wealthy individuals who see their purchase as a form of investment and wealth preservation, and so are are less concerned about achieving high rental yields.
Rental yields for prime areas are among the lowest across the island. According to a Kim Eng report, Orchard Road yields were just 2.8 per cent, Sentosa homes offered 2.6 per cent while homes in Newton languished in last place with 2.4 per cent.
Suburban yields were as high as 4.1 per cent in Tampines and 4.8 per cent in Sengkang – the most attractive estate in the rental market.