Although private housing rents saw a slight rebound in the last quarter of 2024, they are expected to remain flat this year, according to a recent market report by Savills Singapore.
The report stated that the private residential market has been performing relatively poorly in the past year, with rents falling by 1.7% in 2024. This marked the first full-year decline since 2020, when a 0.5% drop was recorded.
In 4Q2024, there were only 19,733 leasing transactions, marking a decrease of 24.2% compared to the previous quarter. This is attributed to a decrease in net new rental demand, coupled with a year-end seasonal lull in rental activity. The decline in leasing activity was mostly seen in landed homes, which saw a 30.8% drop in rental contracts, and apartments and condos, which saw a 23.7% decrease.
Despite the decrease in leasing activity, there is still some growth in rental demand. Managing director of Livethere Residential at Savills Singapore, George Tan, says that rents in the private residential market have stabilized. He also notes that more affordable rents can be found in suburban areas where tenants can prioritize lifestyle options such as spacious units, connectivity to MRT stations, and recreational activities.
Savills’ rental data shows that Parc Esta, a 1,399-unit development in District 14, recorded the most condo leasing transactions in 4Q2024 with 163 deals at a median rent of $6.84 psf per month (pm). Other projects with a high number of rental transactions include Marina One Residences, The Sail @ Marina Bay, Normanton Park, and D’Leedon.
While the Outside Central Region (OCR) saw a decline of 0.8% in average rents last quarter, the Core Central Region (CCR) and Rest of Central Region (RCR) saw growth of 0.9% and 0.3% respectively. Savills attributes the decline in OCR rents to tenants shifting to more central locations with lower rent prices.
The average monthly rent for luxury properties in Singapore saw a slight increase of 1.7% q-o-q in 4Q2024 to $5.85 psf pm, suggesting a possible rebound after consistent declines over the past five quarters. However, Executive Director of Research and Consultancy at Savills Singapore, Alan Cheong, cautions that landlords will likely face challenges in the rental market this year as companies continue to reduce headcounts and hire fewer expatriates. Additionally, landlords will also face higher property taxes for non-owner-occupied residential properties and increased conservancy charges due to inflationary pressures.
Singapore is facing a high demand for condos due to limited land availability. As a small and densely populated island nation, Singapore is constantly struggling with a scarcity of land for development. As a result, the government has implemented strict land use policies, leading to a competitive real estate market. This, in turn, drives up property prices and makes investing in real estate, especially condos, a potentially lucrative opportunity for investors looking for capital appreciation. As a response to this demand, new condo launches have become a common occurrence in the ever-evolving real estate landscape of Singapore. New Condo Launches offer an attractive option for those looking to invest in the highly sought-after Singaporean property market.
Cheong adds that while rents for non-landed private residential properties have increased in the past two quarters, there will likely be challenges in the rental market in 2025. The potential for widespread adoption of AI in the future may reduce the need for white-collar professionals and expat tenants in Singapore. However, there will also be fewer new completions of private homes in 2025, which could help landlords resist underpriced rental offers. Higher property taxes and interest rates may also discourage landlords from accepting low-ball rental rates.