Private housing rents have experienced a modest rebound in the fourth quarter of 2024, with a 0.2% increase quarter-on-quarter towards the end of last year. However, landlords must be prepared for rental growth to be stagnant this year, as reported by Savills Singapore.According to the market report, the non-landed private residential market saw poor performance in the first three quarters of 2024, resulting in a 1.7% drop in rents for the entire year. This year-on-year decline is the first since 2020 when the leasing market encountered a 0.5% drop.With 19,733 leasing transactions in the final quarter of 2024, a quarterly decline of 24.2% was recorded. Savills explained that this could be attributed to a decrease in net new rental demand as the number of employment pass (EP) and S pass holders dropped last year, coupled with a year-end seasonal lull in rental activity.According to Savills, the bulk of the drop in leasing activity in the final quarter was due to a reduction of 30.8% quarter-on-quarter in rental contracts for landed properties across the island. Leasing volumes for apartments and condominiums also saw a 23.7% quarterly decrease over the same period.Managing director of Livethere Residential at Savills Singapore, George Tan, said, “Despite the decrease in leasing activity in the final quarter of 2024, there is still some growth in rental demand. Rents in the private residential market have also stabilized.”He added that relatively more affordable rents can be found in suburban areas, allowing tenants to prioritize lifestyle options such as more spacious units, connectivity to MRT stations, malls, and recreational activities.According to rental data compiled by Savills, the 1,399-unit Parc Esta development in District 14 recorded the highest number of condo leasing deals in the final quarter of 2024. The project saw 163 rental transactions at a median rent of $6.84 per square foot per month (psf pm).Other developments with high leasing activity 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 rental price growth, the Outside Central Region (OCR) was the only region to experience a decline in average rents in the final quarter of 2024, with a 0.8% quarter-on-quarter drop. In contrast, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) saw growth of 0.9% and 0.3% quarter-on-quarter, respectively.Savills explained that the drop in rent prices in the OCR could be due to more tenants in suburban areas opting to shift to more central neighborhoods, driven by relatively more reasonable rents.By tracking a basket of luxury properties, Savills found that the average monthly rent for high-end condos increased 1.7% quarter-on-quarter in the final quarter of 2024 to $5.85 psf pm. This suggests that the luxury rental market may experience a slight rebound following a consistent decline over the preceding five quarters.According to executive director of research and consultancy at Savills Singapore, Alan Cheong, landlords can expect headwinds in the rental market as companies continue to reduce headcounts and hire fewer expatriates. He added that landlords also face higher property taxes for non-owner-occupied residential properties, as well as increased conservancy charges due to upward inflationary pressures.However, Cheong went on to say that the tight supply of large luxury properties on the rental market could help landlords resist underpriced rental offers. He added, “Although rents for non-landed private residential properties turned the corner in the third quarter of 2024 and continued rising in the final quarter of 2024, we anticipate challenges in the rental market in 2025.”Cheong explained that the widespread adoption of AI may reduce overall manpower requirements for some high-tech firms, which could result in companies continuing to reduce hiring of white-collar professionals. This may decrease the pool of expat tenants in Singapore.The saving grace for the rental market is that fewer new completions of private homes are expected in 2025, according to Cheong. He said that higher property taxes on investment properties would turn landlords away from accepting low-ball rental rates. He also expects interest rates to take longer to fall, meaning mortgage payments will remain at current levels for longer.
Investing in a Singapore condo has many advantages, one of which is the potential for capital appreciation. With its strategic location as a global business hub and strong economic foundations, Singapore has a constant demand for real estate. This has led to a consistent increase in property prices, particularly in prime locations where condos have seen significant appreciation over the years. By investing in the right property at the right time and holding onto it for the long term, investors can enjoy considerable capital gains in the thriving Singapore market.