Around the already congested River Valley area alone, close to 2,700 apartments are due for completion in Valley Park, Mirage Tower, UE Square, the Anchorage and Aspen Heights.
Upper Bukit Timah, a new residential district, will have at least 3,000 new units, mostly in the Hume Park and Hillview developments.
DTZ Leung’s Amos Koh said: “Rentals will be under pressure but they’re not going to move down too quickly. So far our agents have not had to reduce rentals to get expatriate tenants.
“For the next six months or so, rentals will probably remain flat. I don’t see them going up much but I wouldn’t say they will go down.”
While official statistics show that island-wide rentals fell 5 per cent last year, consultants say prime rentals are not coming down but are flattening out.
Whether rents will fall depends on how firm expatriate demand is. It also depends on what proportion of available units is taken up by owner occupiers.
But the completion of large projects like Aspen Heights and Valley Park “will definitely have an effect on rentals in district 9”, said Knight Frank’s Peter Ow.
He added: “If the apartments are not in prime areas, we would expect rentals to dip.”
Supply may also be enlarged slightly by “speculators-turned-investors” – those who have decided to hold on to their properties to lease out rather than sell in today’s quiet market.
Apartments in prestigious districts 9, 10 and 11 can fetch rents up to 20 per cent higher than other popular areas like the east, and up to 40 per cent higher than the west.
According to Richard Ellis, average prime rentals as of March are at S$3.60 per square foot per month, 3 per cent up from December.
At the end of last year, prime rentals were at S$3.50 psf/mth, up 6 per cent from the third quarter. Third quarter numbers were unchanged from the second quarter, when rentals were 6 per cent lower than the first quarter.
A recent Knight Frank study of selected apartments in prime areas gives an interesting breakdown.
For the first few months of this year, gross rents for two-bedroom apartments rose by 8.7 per cent, roughly the same amount as in 2010.
But for larger apartments, rents are rising much slower in 2011 then they did in 2010. Whereas rents for three and four-bedroom units rose by 11-13 per cent last year, they are up by about 8 per cent so far this year.
Knight Frank’s study looked at monthly rentals in upmarket developments like The Claymore, Holland Hill Mansion and Leonie Gardens.
DTZ Leung’s Dr Koh observed a new leasing market emerging for suburban developments where a nearby MRT station gives easy access to the city. “What we’re seeing is very senior management expats living in the prime areas, with middle management going for outlying areas,” he said.
“Family-sized” apartments near MRT stations could fetch $2,000-$3,000 a month, he said. A new project like Dover Parkview, due to be completed this year, should be able to lease for at least $3,000, he said.
Manhattan Beach Apartment Rentals in the prime districts are holding up and will probably stay flat for the rest of the year.