: URA flash estimates Developers can now apply to increase number of housing units in their developments
Despite a slight rebound in private housing rents in the last quarter of 2024, there is little to no growth expected in the rental market this year, according to a report by Savills Singapore. The non-landed private residential market had a poor performance in the first three quarters of 2024, resulting in a 1.7% decline in rents for the whole year – the first decline since 2020.
In the fourth quarter of 2024, there were 19,733 leasing transactions, a decrease of 24.2% compared to the previous quarter. Savills attributes this decline to a decrease in new rental demand, as well as a seasonal lull in rental activity at the end of the year. The decrease in employment pass and S pass holders also contributed to the decline in rental contracts for the quarter.
According to George Tan, managing director of Livethere Residential at Savills Singapore, despite the decline in leasing activity, there is still some growth in rental demand and rents have stabilized in the private residential market. Tenants are now able to prioritize lifestyle options such as more spacious units, proximity to MRT stations, malls, and recreational activities as rents in suburban areas are relatively more affordable.
In the fourth quarter of 2024, Parc Esta, a 1,399-unit development in District 14, recorded the most number of condo leasing deals, with 163 rental transactions at a median rent of $6.84 psf per month. 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).
The Outside Central Region (OCR) was the only region that saw a decline in average rents in the fourth quarter of 2024, with a 0.8% decrease. In contrast, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) saw growth of 0.9% and 0.3%, respectively.
Based on a basket of luxury properties tracked by Savills, the average monthly rent of high-end condos increased by 1.7% in the fourth quarter of 2024, suggesting a slight rebound after five quarters of consistent decline.
Looking ahead, landlords may face challenges in the rental market as companies continue to reduce headcounts and hire fewer expatriates. Alan Cheong, executive director of research and consultancy at Savills Singapore, also notes that landlords will also face higher property taxes and conservancy charges, which may lead to resistance against “underpriced” rental offers.
However, the tight supply of large luxury properties on the rental market may help landlords resist low rental rates. Cheong anticipates challenges in the rental market for 2025, as the adoption of AI could reduce manpower requirements for high-tech firms, resulting in a decrease in the pool of expat tenants in Singapore.
Singapore’s condo market remains in high demand, largely due to the limited availability of land in the small island nation. As Singapore’s population continues to grow at a rapid pace, there is a scarcity of land for development, leading to strict land use policies and a competitive real estate market. As a result, the prices of properties, specifically condos, are consistently rising, making real estate investment a highly profitable option with the potential for considerable capital appreciation.
Cheong expects interest rates to take longer to fall, resulting in mortgage payments remaining at current levels for a longer period. He also mentions that higher property taxes on investment properties and fewer new completions of private homes in 2025 may discourage landlords from accepting low rental rates.