Rental yields steady in April

Investors worried that the return on their residential investment properties might have taken a tumble can relax.

Rental yields held their ground last month as falling prices in the city centre and city fringe region and sustained rental demand propped up these returns.

Data from the Singapore Real Estate Exchange (SRX) found that overall yields for private non-landed homes was 4.06 per cent last month, easing slightly from the 4.23 per cent in the fourth quarter.

Suburban homes posted the best yields of 4.02 per cent, city fringe homes pulled in 4 per cent while city centre homes had the lowest yields of just 3.24 per cent.

Experts say yields are expected to hold at current levels in the short term. However, the sustained health of the rental market will depend on where the economy is headed, they add.

But if the global economy should take a sharp turn for the worse, leading to foreign workers leaving Singapore, then rental demand, and hence yields, could be adversely affected.

Yields in suburban areas could be compressed due to the upcoming supply of completed homes, even as home prices hold steady.

However, it is the opposite scenario in the city centre and city fringe areas where yields may have risen as prices fall.

The rental market might face a challenging period from the second half of 2013 on wards when a bumper supply of public and private homes starts flooding the market.

Source: The Straits Times – 10 May 2012