The rents seen in prime districts last year are now "facing downward pressure" and could ease 3.5 to 4.5 percent on the anticipated completion of new property units between 2008 and 2009, Christopher Fossick, Southeast Asia managing director at Jones Lang LaSalle, said at a briefing in Singapore yesterday.

The U.S. housing slump last year sparked a credit market crisis that's still rippling through the global economy. Singapore's economy expanded 1.9 percent in the second quarter, its slowest pace in five years, amid accelerating inflation and a slump in U.S. demand.

"I think what's going on in the Singapore rental market is that over the last two years, you have this massive influx of people and you haven't had the construction, the new properties," Fossick told reporters. "Over the next 12 to 24 months, there'll be new supply coming in, so there'll be some easing of rents."

He said rents are also falling because expatriates with lower housing budgets are moving out to the non-prime market, adding he expects rents to pick up only when sentiment in the U.S. housing market starts to improve, marking "the end of the credit crisis."

Prime properties are those located in the city's key areas near its central business district. Average rents for the properties are as much as S$4.90 per square foot a month, according to Jones Lang LaSalle data. A 1,000 square foot, two- bedroom apartment would therefore cost S$4,900 ($3,620) a month.

The largest drop in prime district rents was by 7 percent to 9 percent in 1998, while minor declines were also recorded in 2002 and 2003, Jones Lang LaSalle figures show. Last year, rents increased by 11 percent to 12 percent.

Source: Bloomberg