Greater faith in owning physical assets?

Rents for residential properties may be falling, but yields – the annual rent as a percentage of the home’s value – have not yet plummeted like a stone as some fear.

Ms Germaine Ng, who just found a tenant for her three-bedroom condominium unit near Yew Tee MRT station, said yields are “slightly better” than leaving her money in the bank. Executive condo owners may sublet their unit after fulfilling the MOP. Upcoming executive condo include Treasure Crest and Northwave EC while existing ones include The Terrace EC, Brownstone EC, The Visionaire EC, Parc Life EC , Waterwoods EC, Signature at Yishun, Skypark Residences, Wandervale EC, The Vales EC, The Criterion EC, Bellewaters EC, Bellewoods EC.

After three months of marketing, she managed to rent the unit out for $2,800 a month, down from $3,300 previously.

Ms Ng, who pays about $300 in maintenance fees, has repainted the apartment and polished the floor for about $2,200 in all, and is also adding furniture at her tenant’s request.

Based on the unit’s estimated $1.2 million value, the yield is about 2 per cent, taking into account some vacant periods and other factors.

“I’m just glad someone is taking it,” she told The Straits Times.

The median gross rental yield islandwide was about 3.2 per cent last month, based on median prices of $1,223 per sq ft (psf) and median rents of $3.26 psf in the month, a study by Savills has found.

This was down from the gross median yield of about 3.7 per cent a year earlier, based on median prices of $1,115 psf and median rents of $3.45 psf in the month.

Someone buying in May last year and renting the property out starting May this year would have a gross yield of about 3.5 per cent.

This yield decline seems to reflect not just falling rents, but also a slight rise in median prices, noted Mr Alan Cheong, Savills Singapore research head.

executive condo photo 7