It took a big fire at Marina Bay Suites to expose the chill in the rental market.
One disconcerting fact to emerge from the incident at the posh condo is that less than 10 per cent of the units are occupied even though over 90 per cent of them have been sold by the developer already.
It begs the question: Why would anyone want to buy them in the first place, only to leave them vacant, especially when they come with an expensive price tag?
This newspaper has quoted agents as saying a three-bedroom unit in the 221-unit development costs $3 million while a four-bedder fetches up to $6 million. One of the three penthouses sold for an eye-popping $19.3 million.
If the buyers had left such big sums in the bank instead, they would still have enjoyed some returns, despite current near-zero interest rates.
Worse, if they continue to be fussy over tenants and asking rentals, they may find themselves with a whopping tax bill. This is because there is no longer any property tax refund on unoccupied units. There is also the hefty sum they have to fork out each month for the condo upkeep.
The sorry episode at Marina Bay Suites reinforces an observation made by this column over a year ago that even then, owners of upmarket condos were facing difficulties in leasing out their units unless they were willing to slash their asking rental.
"On paper, their investments look good because their prices appeared to have appreciated sharply. But they are not getting much by way of returns in the form of rent because the pool of high-flying tenants appears to be drying up," this column had noted.
So far, the chill in the rental market appears to be confined to the upmarket condo segment, but the big worry is that the malaise may spread to the rest of the residential sector as well.
Still, the concerns seem to be unfounded.
A Savills report shows that in the third quarter of last year - the latest quarter for which data is available - a record 15,083 rental transactions were signed. This was a 11.6 per cent jump on the previous quarter.
Data from the Urban Redevelopment Authority shows rentals holding up. For the third quarter, its overall index for private residential properties rose 0.2 per cent.
But a potential oversupply situation looms. A large number of units - 17,459 to be precise - were left vacant in the third quarter, and this will get worse with another 26,000 units slated for completion this year.
Sure, some of the newly completed units will be occupied by HDB upgraders, but the worry is they may add to the already stiff rental competition by putting up their vacated HDB flats for lease if they cannot sell them on the softening HDB resale market.
There is also a growing fear that the pool of expatriate tenants may start to shrink, as they face difficulties in getting their employment passes approved or renewed, as companies with more than 25 employees must advertise job openings on a government-sponsored jobs bank website before they can hire foreigners. The jobs bank will be launched by mid-year.
One particular area of concern would be the large number of new shoebox units coming up on the rental market, whose owners had bought in the past few years as they were affordably priced at below $1 million.
For those desperate enough to want to quit being landlords altogether, the moribund state of the housing resale market offers little consolation.
Flash estimates from the Singapore Real Estate Exchange show the number of condo units and private apartments resold almost halved to 6,550 last year from 12,278 in 2012.
Worse, the crunch appeared to be more acute in the second half of the year, after the Government capped a home loan applicant's total monthly debt repayments to 60 per cent of his income. In November and again in December, fewer than 400 resale units changed hands a month.
But it would be wrong to think that property investors are behaving like ostriches burying their heads in the sand, oblivious to the hazards ahead.
Most of them believe they can weather the oncoming storm, as long as mortgage rates stay low and they are able to service their monthly instalments.
However, the negative factors have soured their buying appetite. This may help to explain the stunning drop in new home sales to a mere 259 units last month, from 1,271 units in November and 1,410 units in December 2012.
For landlords caught between getting a sub-par rental and a difficult resale market, getting kicked in the belly, even before the Year of the Horse canters in, is painful. They can't wait for the year to be over.
This story was first published in The Straits Times on Jan 20, 2014
To subscribe to The Straits Times, please go to http://www.sphsubscription.com.sg/eshop/