The serviced residences market will be seeing 1,200 new units from eight developments over the next four years. As at 2Q, the Singapore market already had more than 4,600 units in 50 developments.
However, there will be no worries of oversupply, because demand is expected to grow at a faster pace relative to supply as more MNCs rent the apartments as temporary accommodation for their employees. “The economy is likely to see firmer growth, with many MNCs expecting to increase their headcount this year,” Patrick Lai, director of corporate residential leasing at Savills Singapore, says in a report.
Citing a survey by Hudson, a US-based employment services firm, Savills notes that 51% of the 400 executives surveyed last November had intended to hire in 1Q2010, up from 34% in 4Q2009. “This could lead to a larger pool of expatriates working in Singapore in the coming quarters,” Lai says.
Rental, according to Savills, is likely to increase 5% to 10% this year, extending a recovery that began in 1Q2010. According to Savills, rates for high-end and mid-tier apartments rose 2.9% q-o-q to an average of S$260 to S$320 a day in 1Q2010. Between 2Q2008 and 4Q2009, they dropped 20.8%.
Occupancy rates have also recovered. For 1Q2010, they were up 1.5% q-o-q to 86% and 15.7% y-o-y. The latter is one percentage point higher than the average historical occupancy rate of 85%, according to Savills.
Clearly, the serviced-residences market is on a positive trend. “Serviced apartments, which offer lease flexibility, cost efficiency, spaciousness and the comfort of home living, have risen in popularity compared with hotels,” says Lai. “For a country with a significant expatriate population, the serviced apartment industry in Singapore has sprung into prominence in recent years.”
The eight upcoming developments are Frasers Hospitality’s 300-unit Modena Singapore at Changi Business Park; United Engineers’ 305-unit Park Avenue Residences Changi, also at Changi Business Park, and 370-unit Park Avenue Suites Rochester at Fusionopolis; Tan Chong Realty’s additional 62 units at its Wilby Central on Queen Street; and four unnamed projects: a 85-unit development at Claymore Hill by Sajahtera Investments; a 34-unit project along East Coast Road by Warees Investments; a 28-unit project at Rangoon Road by Olivine Capital; and a 16-unit project at Shrewsbury Street by Glastech Investment. (See tables).
Savills also notes that over the last two years, there have been more high-end serviced apartments coming into the market, with asking rents of S$16 to S$20 psf a month for one-bedroom units. They include the 146-unit Ascott Raffles Place Singapore; Pan Pacific Serviced Suites with 126 units and Orchard Scotts Residences with 206 units.
However, there is a trend of more serviced apartments being set up in the city fringes or suburban areas, especially near new regional hubs or commercial zones. Most of these comprise mid-tier serviced apartments (S$10 to S$13 psf a month) or budget serviced apartments (S$6 to S$7 psf) for one-bedroom units. The developments include the 50-unit Fraser Place Fusionopolis, which taps the expatriate population working at Buona Vista’s one-north, and the upcoming Park Avenue Suites Rochester, Park Avenue Residences Changi and Modena Singapore.
Alex Chan is a regular contributor to The Edge Singapore
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 817, Aug 2-8, 2010.
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