Rock bottom: Homeowners struggle with woefully low rental yields in Q3

This level hasn’t been seen in over 14 years.

An incredibly tough market awaits homeowners looking to rent out their properties. Rental yields across the island have fallen dramatically in the past years, leaving landlords grasping at straws.

According to a report by Square Foot Research, overall rental yields in Singapore have fallen to 3.5% in the third quarter, a level last seen in the first quarter of 2000.

“Not all cheap deals are good deals. Property investors seeking opportunities in the bearish market should look beyond capital appreciation to get the most out of their investments,” the report stated.

The report noted that while rental volume surged by 13.1% q-o-q and 11.8% y-o-y to 16,050 rental contracts signed in 3Q1-the highest since 2000--median rent remained relatively stagnant at around $3.7 psf pm, a level since 3Q12.

Overall rental price index fell by 1.1% q-o-q and 2.2% y-o-y, with Properties in the CCR and the RCR hardest hit by declines.

“The rental market is likely to remain competitive in the short run due to an avalanche of supply from completing projects launched since 2010 coupled with stricter hiring policies for foreign talents. With a reduction of expatriate hiring and housing allowance by companies, rental compression is likely to persist,” the report noted.

The report further stated that a few properties continue to have rental yields above 5%. These are mostly 99-year leasehold and are located in the mass market districts, such as Suites@Eastcoast, Tampines Court, Park West, Icon, and Aquarius by the Park.