Why the property bubble may burst soon.
The hottest investment vehicle now has got to be property.
Property developers owning commercial buildings in town are hiking up rents and companies are paying through their noses because they don't want to lose their spot, especially when supply for prime office space is running dangerously low.
Investors in private property, while waiting to sell off their units for a hefty profit, are pocketing tidy little sums monthly from jacking up rentals to tenants so used to their dwellings they are adverse to the idea of moving out.
All's well and good for the property market, and for the people who had the foresight to invest in it before the big boom came around.
But what of the companies who lease prime office space and the people who rent condos and landed property?
Humanising the effects of this upswing in property will show just how easily, and soon, the property bubble could burst.
First, companies situated in the central business district face burning huge holes in their pockets if they want to stay in their premises. They are reluctant to move because they want to stay close to their customers.
These companies may suffer a double whammy in costs if they hire expatriates, because their salary packages usually include relocation and rental expenses.
So besides paying more to rent prime office space, they also have to pay more for their expat staff to live in Singapore.
These factors might either push firms out of the CBD area or deter them from hiring foreign expertise, even if their business needs them.
Second, the expats have to pay more for their private property rental. Their companies' rental assistance may not be proportionate to their rent increase. Some of them face rental hikes of 50-100%, and many of them have since moved out of districts 9, 10 an 11. Some have even downgraded to staying in HDB flats.
Those who find it increasingly stressful to stay on will have to reconsider their future in Singapore.
Now that will put a huge dent in the country's target of a record population by 2015.
While the empty flats in Sengkang stand more chances of being filled now, the near future of the private property market seems less bright.
After all, if even expats cannot afford condos in districts 9, 10 and 11, what hope is there for the locals?
And now that the expats are downgrading and moving to the outskirts, it may be even more difficult for us to buy property in the suburban areas without burning holes in our own pockets.
Serene Lim
*picture courtesy of www.offthemarkcartoons.com.
ArchivesProperty developers owning commercial buildings in town are hiking up rents and companies are paying through their noses because they don't want to lose their spot, especially when supply for prime office space is running dangerously low.
Investors in private property, while waiting to sell off their units for a hefty profit, are pocketing tidy little sums monthly from jacking up rentals to tenants so used to their dwellings they are adverse to the idea of moving out.
All's well and good for the property market, and for the people who had the foresight to invest in it before the big boom came around.
But what of the companies who lease prime office space and the people who rent condos and landed property?
Humanising the effects of this upswing in property will show just how easily, and soon, the property bubble could burst.
First, companies situated in the central business district face burning huge holes in their pockets if they want to stay in their premises. They are reluctant to move because they want to stay close to their customers.
These companies may suffer a double whammy in costs if they hire expatriates, because their salary packages usually include relocation and rental expenses.
So besides paying more to rent prime office space, they also have to pay more for their expat staff to live in Singapore.
These factors might either push firms out of the CBD area or deter them from hiring foreign expertise, even if their business needs them.
Second, the expats have to pay more for their private property rental. Their companies' rental assistance may not be proportionate to their rent increase. Some of them face rental hikes of 50-100%, and many of them have since moved out of districts 9, 10 an 11. Some have even downgraded to staying in HDB flats.
Those who find it increasingly stressful to stay on will have to reconsider their future in Singapore.
Now that will put a huge dent in the country's target of a record population by 2015.
While the empty flats in Sengkang stand more chances of being filled now, the near future of the private property market seems less bright.
After all, if even expats cannot afford condos in districts 9, 10 and 11, what hope is there for the locals?
And now that the expats are downgrading and moving to the outskirts, it may be even more difficult for us to buy property in the suburban areas without burning holes in our own pockets.
Serene Lim*picture courtesy of www.offthemarkcartoons.com.
Labels: companies, expatriates, property, Singapore
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