How to ask your landlord for a 15% rent cut

Read this article and you will negotiate yourself a better rent for your home or office in 2012.

DBS is predicting rents to be cut by 10-15% this year, while office values could depreciate by up to 10% over the same period.

Here’s more from DBS:

Expect lower residential sales volume. The recent move to clamp down on investment demand coupled with the anticipated increase in completed new housing inventory has increased the risk of structural imbalance in the sector in the medium term. We estimate that an average of 33,434 units of housing could enter into the market annually between 2012-2015 or 3.5x the average over 2004-2010. However, the possibility of a sharp price correction is low at this point as both individuals and developers have strong holding power in an extended low interest rate environment. As such, we expect private home prices to dip by 5% in 2012 and primary volume demand to slow to 11,000–12,000 units from c16,000 units this year.

Rising headwinds in the office sector. Outlook for the office sector is also hampered by the uncertain global macroeconomic climate. While we do not expect a repeat of the global financial crisis conditions, weaker appetite for office space and rising commercial supply over the next 2-3 years would dampen landlord’s ability to price rents. We expect 2012 office demand to soften to c1.2msf vs an estimated 2msf take up for this year.

Office rents are also likely to correct by 10-15% next year while office values could depreciate by up to 10% over the same period.

Financials
Earnings growth outlook to decelerate. Earnings growth is likely to slow as residential sales taper off and office rents correct. Nevertheless, developers’ balance sheets have never been healthier with a net gearing position of 0.18x as at 3Q11 for the sector supported by bumper presales over the past few years.

Likely to be cushioned by strong balance sheets. The worst-case scenario analysis shows that developers will continue to have low gearing even if new sales dwindle over the next 2 years and are in good position to landbank selectively to position for future growth.