SINGAPORE - The number of residential leases looks likely to hit a record this year, although vacant units are piling up due to more projects being completed over the past 12 months.
The number of leases could reach 48,000, which would break the record of 45,062 transactions set last year, said property consultancy Savills on wednesday.
It pointed to the 42,139 leases signed in the 10 months to the end of October and added that November and December have historically averaged 3,000 deals a month.
The total value of all leasing transactions could exceed the record $218 million set last year, Savills said. It had reached $208 million by Oct 31.
This is partly because median monthly rentals for condo units and apartments, excluding those in executive condominiums, reached a new high of US$3.75 psf across the island in October.
This is 7 per cent higher than in the same period a year ago and 0.5 per cent higher than the level recorded in September this year.
"Constrained rental budgets have led tenants to search for smaller homes, either singularly or sharing, driving up rents on a per sq ft basis," said Savills research head Alan Cheong.
But belt-tightening has hit the market for luxury homes, with rents falling for the sixth straight quarter, Savills said.
Rents of high-end condo units tracked by Savills dipped 1.4 per cent to $4.88 psf per month on average, from the third quarter to the fourth quarter.
While leases are being signed at a furious rate, there are more and more empty flats around as more homes are completed.
The vacancy rate of completed private homes grew to 6.1 per cent of the 276,346 total completed units in the third quarter from 5.9 per cent of the 273,050 completed units in the previous quarter.
There were 14,198 vacant condo units and 2,679 vacant houses as at Sept 30.
The vacancy rate increased in the central, eastern and western regions in tandem with a surge in condo completions in these areas.
The big projects that were completed include the 1,129-unit Reflections at Keppel Bay, the 712-unit Caspian in Lakeside and the 646-unit Double Bay Residences in Simei.
The vacancy rate was 7.9 per cent for the central region in the third quarter, slightly higher than the region's five-year average of 7.5 per cent.
The east's rate rose to 4.5 per cent in the third quarter from a five-year average of 3.5 per cent.
In the west, the rate hit 4 per cent, compared with a five-year average of 3.6 per cent.
Vacancies will likely spike soon as an "avalanche of new homes" will be completed in the next two years, Savills said.
The Urban Redevelopment Authority (URA) said in October that the number of new private properties in the pipeline has ballooned to more than 100,000 units at the end of the third quarter.
More than 35,000 private homes alone will be ready next year and in 2014, with the rest completed after that, the URA said.
Savills expects a "steady level of leasing support" next year as firms continue to bring in expatriate employees, with 47,000 to 49,000 transactions completed.
But while mass-market homes will likely be within the limited budgets of new renters, rents for high-end private units could drop by 5 per cent to 10 per cent to below $5 psf per month next year, Savills said.