Source: Savills
Private housing rents saw a small uptick of 0.2% in the final quarter of 2024, after a prolonged period of decline. However, landlords should not expect significant growth in the rental market this year, as the poor performance of the non-landed private residential market in the first three quarters of 2024 largely contributed to rents falling by 1.7% over the whole of last year.
According to a market report by Savills Singapore, the decline in rental demand last quarter can be attributed to a decrease in net new rental demand, as well as a year-end seasonal lull in rental activity. This was compounded by a drop in the number of employment pass and S pass holders last year.
Despite the decrease in leasing activity, Savills Singapore’s managing director of Livethere Residential, George Tan, notes that there is still some growth in rental demand and rents in the private residential market have stabilised. He also points out that relatively more affordable rents can be found in suburban areas, which offer tenants more spacious units, connectivity to MRT stations, malls, and recreational activities.
According to Savills’ rental data, Parc Esta, a 1,399-unit development in District 14, saw the most number of condo leasing deals in 4Q2024, recording 163 rental transactions at a median rent of $6.84 psf per month (pm). Other developments that saw a high number of rental transactions include Marina One Residences (126 transactions at $6.62 psf pm), The Sail @ Marina Bay (126 transactions at $6.72 psf pm), Normanton Park (120 transactions at $6.26 psf pm), and D’Leedon (107 transactions at $5.43 psf pm).
In terms of price growth, the Outside Central Region (OCR) was the only region that saw a decline in average rents last quarter, with rents falling by 0.8% q-o-q. In contrast, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) grew by 0.9% q-o-q and 0.3% q-o-q, respectively.
Savills attributes the decline in rent prices in the OCR to a shift in tenant preferences, with more tenants choosing to rent in central neighbourhoods instead of suburban locations due to more reasonable rents.
The average monthly rent of high-end condos also saw a slight increase of 1.7% q-o-q in 4Q2024, reaching $5.85 psf pm, according to a basket of luxury properties tracked by Savills. This suggests that the luxury rental market could see a slight rebound after a consistent decline over the past five quarters.
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Looking ahead, landlords will likely face challenges in the rental market as companies continue to reduce headcounts and hire fewer expatriates, according to Alan Cheong, executive director of research and consultancy at Savills Singapore. He adds that higher property taxes for non-owner-occupied residential properties, as well as increased conservancy charges, could add to landlords’ financial burden.
However, the relatively tight supply of large luxury properties on the rental market may help landlords resist “underpriced” rental offers, says Cheong. He also expects challenges in the rental market in 2025, as the widespread adoption of AI could reduce overall manpower requirements for some high-tech firms, and companies may continue to reduce hiring of white-collar professionals, leading to a smaller pool of expat tenants in Singapore.
“The saving grace for the rental market is that in 2025, fewer new completions of private homes are expected,” he says. Cheong believes that landlords will also be less likely to accept “low-ball” rental rates due to higher property taxes. He also expects interest rates to take longer to fall, resulting in mortgage payments remaining at current levels for longer.
Overall, while private housing rents saw a slight rebound in the final quarter of 2024, landlords should anticipate flat rental growth this year, as the rental market continues to face challenges in the wake of the pandemic and economic uncertainty.