Rents for posh apartments to fall 10% this year

Developers are pressured by Qualifying Certificate deadline.

According to Colliers International, rents are expected to come under further downward pressure. The increasingly competitive market could prompt landlords to lower their rent expectations in order to secure tenants. As such, rents for luxury apartments are projected to decline by up to 10% for the whole of 2014.

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Developers of high-end properties may feel the heat to meet the Qualifying Certificate deadline, which requires developers whose shareholders and directors are not all Singaporeans, to complete construction of the development within five years and to sell all units within two years of obtaining the temporary occupation permit.

Furthermore, owners of high-end homes face higher holding costs with the kicking in of the progressive fiscal system on 1 January 2014.

Particularly for investors who are servicing mortgages, the abolishment of tax concessions for vacant properties, as well as higher taxes for high-end properties on the back of a weak leasing market, could be a push factor, prompting them to put their properties on the market for sale, adding to the pool of new unsold units.

The heightened competition could weigh on prices of high-end/luxury residential properties for which an average decline of between 10% and 15% could be seen in 2014.