Rentals making gentle waves at Sentosa Cove

Rentals making gentle waves at Sentosa Cove

They could hold firm despite gloom elsewhere and offer decent yields

 

(SINGAPORE) Close to 300 homes at Sentosa Cove, including 200 condominium units, have received Temporary Occupation Permit (TOP) and the exclusive enclave is starting to bustle.

 

DTZ Debenham Tie Leung, which is the property manager of the 200-unit The Berth by the Cove says that the development is now about 70 per cent tenanted.

 

It added that the remaining units of the fully-sold development are owner-occupied, some of which are weekend homes or holiday homes for foreigners.

 

Other developments that have received TOP include The Berthside, Ocean 8, The Villas @ Sentosa Cove, Coral Island and North Cove.

 

Expected to come onto the leasing market next is the 116-unit The Azure, which is also fully sold.

 

And the popularity of The Berth by the Cove with the leasing market bodes well for the remaining 2,200 homes that are still being constructed.

 

DTZ senior director (research) Chua Chor Hoon said that the supply of new homes in Sentosa Cove is still ‘limited’ compared to the rest of Singapore and the units have ‘the unique feature of close proximity to the sea’.

 

Saying that the limited supply of units in Sentosa Cove will limit any downward pressure on rentals, Ms Chua added: ‘Rental prospects are likely to be better.’

 

This upbeat outlook for Sentosa Cove is particularly pertinent at a time when new housing supply is expected to flood the rental market by next year.

 

In a recent report, DTZ noted that in general, rentals would come under pressure between 2009 and 2011, not just from new supply but from the sub-sale market as well as it is unlikely that speculators will want to hold units for low rental income.

 

DTZ said that based on its basket of non-landed properties in the prime district (excluding luxury properties) average monthly rents are currently still holding steady at $4.90 psf per month.

 

While DTZ did not reveal rentals at The Berth by the Cove, a check with SISV-Realink shows that the rental for a unit there contracted for $19,500 per month in May.

 

Colliers International also said it believes median rentals could be around $6 psf per month.

 

Colliers director (research and advisory) Tay Huey Ying added that based on the average launch price of The Berth by the Cove of about $860 psf in 2004/2005, investors who bought units at this price could now be enjoying a net rental yield of about 5.5 per cent.

 

Those that bought units from the secondary market later when the price rose to about $1,500 psf will be looking at a net rental yield of 3.5 per cent.

 

‘Nevertheless, these investors would still be enjoying a higher net rental return compared to those who invested in a freehold luxury apartment on the main island of Singapore in recent times since the latter are generating average net rental returns estimated to be in the region of 2.3 per cent,’ added Ms Tay.

 

In time over 1,700 condominiums will be completed. Savills Singapore director (marketing and business development) Ku Swee Yong believes that buyers for most of these units will be investors, suggesting that a majority will be put up for lease.

 

Still, he said that there is a niche market for this type of waterfront home. ‘We had an expat client who was looking to rent and after showing him a few options, he chose The Berth because he already has a yacht,’ reveals Mr Ku.

 

Interestingly, Mr Ku says the advent of the integrated resort on Sentosa may not necessarily guarantee a pool of tenants. ‘Not everyone will want to live so close to work,’ he added.

 

What he does believe is crucial to the success of Sentosa Cove as an exclusive enclave is the provision of high end amenities. He added: ‘Once these are completed, we believe Sentosa Cove rents could demand a premium over Orchard Road.’

 

Source: Business Times

Sentosa rents soar

Sentosa rents soar

 

Construction not putting tenants off

 

SENTOSA Cove is slowly, but surely, attracting high-end tenants with the completion of an estimated 300 homes, including the 200-unit The Berth by the Cove condominium.

 

Despite ugly construction sites dotting many parts of Sentosa, the first luxury condo units and landed properties have drawn rents comparable to, if not higher than those in prime districts on the mainland, including Nassim Park and Grange Residences.

 

Colliers International has just completed its first rental survey of Sentosa Cove and says two-bedroom condos are fetching an average $5,350 a month, or $4.61 per square foot (psf).

 

Larger, four-bedroom units have rented for an average $10,625, which also equates to $4.61psf. However, one rented for $12,250.

 

As for landed homes, terrace houses ranging in size from 2,600 to 3,600 square feet have let for an average $15,333, or $5.19psf, while the first luxury bungalows ranging in size from 2,530 to 4,983 sq ft have been let for an average $24,000. The highest rental to date is $30,000.

 

“This is encouraging, given that so much construction is going on,” said Tay Huey Ying, Colliers director of research and advisory. “When fully-developed, it should be even more appealing to potential tenants.”

 

The idea of developing the 117-hectare cove into a waterfront enclave was first mooted in the ’80s. However, the first land parcel was only sold to the private sector in end-2003. Five years on, temporary occupation permits have been granted to just the first five small developments completed, with Ho Bee Group’ 200-unit The Berth being by far the largest.

 

More is to come, with land already sold capable of accommodating over 2,000 condo units and 400 bungalows or terrace homes.

 

Colliers said investors who bought units in The Berth at the end of 2004 or early 2005 and have held onto them are today enjoying attractive net rental yields of 5.5 per cent. Purchase prices have since surged. As such, Colliers said those who entered the market later in 2007 now have to contend with lower yields averaging at 3.5 per cent.

 

Prices of non-landed homes have shot up from an initial launch price of $785 per sq ft in November 2004 for The Berth to current $2,800psf for Lippo Group’s The Marina Collection.

 

Source: Today Newspaper