Sakina Hassanal

HassConsult today unveiled the Hass Property price indices for the second quarter of 2017, showing increased interest in rental yields by investors as capital gains become harder to achieve. Investors are giving rental yields greater consideration as the marginal house price increases over the last few years, have reduced opportunities to flip properties and reap large capital gains.

The supply of one to three-bedroom apartments in the letting market is indicative that investors are looking for passive and regular income as opposed to capital gains that are made when exiting an investment.

“The opportunities to buy properties and then sell them at a handsome return are becoming thinner as prices have become static over the last few years. This realization is making buyers opt for properties that can provide constant and assured income even as rents stabilize,” said Ms Sakina Hassanali, Development Consulting and Research at HassConsult.

Apartments that are between one and three bedroom account for 55.9 per cent of properties that are on the rental market and 36.3% of the sales market as more units come to the market despite the prevailing market conditions that have affected the rental market, shrewd investment now requires an in-depth understanding of market gaps and potential. The Hass Composite Lending Index recorded a 2.0 per cent drop in the second quarter, primarily driven by a 4.1 per cent fall in asking prices in apartments even as focus shifts to rents over capital gains.

“The tough economic environment that is having an effect on incomes is making it difficult to raise rents but even in this situation, interest in these properties has not waned as investors prefer certain and stabilised returns. Additionally, other asset classes are performing poorly,” said Ms. Hassanali.

On the sales front, there was a 3.1 percent drop over the quarter with detached houses recording the biggest quarterly drop at 4 per cent. Apartments on the other hand recorded a 0.5 per cent increase in asking prices over the year despite the 1.4 per cent quarterly drop.