Shedding light on the occupancy rates of new condos

Vacancy rates for private non-landed homes climbed to 9.4% in 4Q2015, a 10-year high. The North East Region fared the worst, with vacancy rates of its condominiums hitting 16.5% in 4Q2015. This could be due to the completion of the 610-unit River Isles and the 393-unit Kovan Regency, where residents have yet to move in. On a weekday evening, The Edge Property visited five condos that were completed in 2015 to shed light on their occupancy rates.

Two of the projects — A Treasure Trove and The Luxurie — are located near an MRT station. While not fantastic, a decent share of units were lit up, indicating they were occupied. The visits generally took place between 8pm and 9.30pm, except for A Treasure Trove, which was at 7.30pm. To be fair, we shortlisted projects that had been completed for at least six months.

The 882-unit A Treasure Trove was completed last May.

Click here for listings at A Treasure Trove.

The other projects which we visited — Boathouse Residences, H2O Residences and Riversound Residence — are not located near an MRT station. Their occupancy rates were visibly lower, judging from their share of dark units. A Treasure Trove is an 882-unit condo located less than 300m from the Punggol MRT station and Waterway Point. The Luxurie is also located less than 300m from Sengkang MRT station and comprises 622 units.

Both A Treasure Trove and The Luxurie attracted more than 200 rental contracts each in 2015, based on data from URA. In comparison, the other projects that are not near any MRT station saw fewer than 100 rental contracts each, although it may be argued that the properties were purchased mainly for owner-occupation.

The 493-unit Boathouse Residences was completed last April.

Property agents with rental listings in these projects commented that most tenants would request for properties with proximity to an MRT station. There are exceptions, however, where some tenants would trade convenience for bigger units or other attributes.

The rental downtrend is also spurring some tenants to upgrade from public to private housing. In 4Q2015, the median monthly rents for four-room HDB flats in the North East Region ranged from $2,000 in Punggol and Sengkang to $2,400 in Serangoon. Meanwhile, the average monthly rents for three-bedroom condo units between 1,000 and 1,100 sq ft start from $2,580 at Riversound Residence.

The 590-unit Riversound Residence was completed last May.

According to URA, rents for private non-landed homes in the mass-market segment have fallen 9% peak to trough, compared with 5% for those in the city fringe. In the North East Region, median monthly rents for private non-landed homes have declined 8.6% from $3.14 psf in 3Q2013 to $2.87 psf in 4Q2015. Among the projects that The Edge Property visited, there is currently just a small difference in rents between projects located near an MRT station and those that are not. Monthly rents for two-bedroom units measuring between 700 and 800 sq ft at A Treasure Trove averaged $2,187.

At The Luxurie, monthly rents for similar units averaged $2,311 in 4Q2015. At projects that are not served by an MRT station, monthly rents for similar units were on a par with or just slightly cheaper, averaging $2,075 at Boathouse Residences, $2,190 at Riversound Residence and $2,148 at H2O Residences.

The small difference in rents could be attributed to their waterfront location and first-mover advantage, given that other projects in the vicinity are still under construction. The projects might also have fewer units for rentals and more for owner-occupation.

Still, the official statistics do not take into account additional incentives that landlords might have to throw in to attract tenants to less accessible projects or the time taken to market the units.

The difference in rents between projects served by an MRT station and those that are not could widen in future as more supply enters the market. Based on URA data, the North East Region has 17,827 private homes and executive condos in the pipeline, or about one-third its current stock of 53,426 homes. Property investors seeking rental income might do well to stick to the safe and conventional attribute of a good location — proximity to a transit node.

Project details of selected new condos in the North East Region

Project Name	Planning Area	TOP Date	Total Units	No. Rental Contracts in 2015	Rental Breakdown for 4Q2015*
					Type	Size (sq ft)	Average monthly rent ($)
A Treasure Trove	Punggol	May-15	882	250	2-bedroom	700 to 800	2,187
					3-bedroom	1,100 to 1,200	2,647
The Luxurie	Sengkang	Jun-15	622	212	1-bedroom	400 to 500	2,150
					2-bedroom	700 to 800	2,311
Boathouse Residences	Hougang	Apr-15	493	74	2-bedroom	700 to 800	2,075
H2O Residences	Sengkang	May-15	521	89	1-bedroom	500 to 600	1,800
					2-bedroom	700 to 800	2,148
Riversound Residence	Sengkang	May-15	590	48	1-bedroom	400 to 500	1,820
					2-bedroom	700 to 800	2,190

*Excludes rental contracts with unidentified unit type

Source: The Edge Property

This article appeared in The Edge Property Pullout, Issue 715 (February 15, 2016) of The Edge Singapore.

Related Articles From TheEdgeProperty.com.sg
The impact of MRT on property prices
More distressed sales expected at luxury condos
Do people really understand property price indices?
Prices of private homes fell 1.3%, HDB resale prices declined 0.3% in 3Q2015