Private condo rents could grow 2% in 2019

It could be bolstered by the low supply of GLS and HDB BTO units.

Private condo rents could get a boost of 2% by end-2019, Jefferies said, as supply of government land sales (GLS) and Housing and Development Board Build-to-Order (HDB BTO) units remains low.

“H1 2019 GLS confirmed supply of 2025 units is the lowest since H1 2016,” the analyst said. “If the trend of low GLS supply persists, it may lead to the next wave of en bloc unless developers diversify or consolidate.”

Also read: HDB to launch 15,000 BTO flats in 2019

The firm also noted that leasing trends appear to be positive considering the falling vacancy rate and rising rents. They added that private leasing volumes have improved 8% annually since 2013, to exceed the growth of resident population (0.8%), foreign population (1.6%), as well as the annual growth of private residential stock (5%).

“Perhaps it is a combination of shortening of lease tenor, leasing of rooms versus homes and less owner-occupancy,” the report explained.

Meanwhile, Jefferies thinks that private condo prices will likely stay flattish in 2019 with yields improving on the back of rising rents.