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Private housing rents saw a modest rebound in the fourth quarter of 2024, rising by 0.2% compared to the previous three months. However, the rental market is expected to remain flat this year, according to a report by Savills Singapore.
The non-landed private residential market had a lackluster performance in the first three quarters of 2024, resulting in a 1.7% decline in rents for the entire year. This is the first full-year decrease since 2020, when there was a 0.5% drop in rental prices.
In the fourth quarter of 2024, there were 19,733 rental transactions, representing a decline of 24.2% compared to the previous quarter. According to Savills, this drop is likely due to a decrease in net new rental demand, as the number of employment pass and S pass holders decreased last year, coupled with a seasonal lull in rental activity towards the end of the year.
The report noted that the majority of the decline in rental activity in the last quarter came from a 30.8% drop in rental contracts for landed homes across the island. There was also a 23.7% decrease in leasing volumes for apartments and condos during the same period.
George Tan, managing director of Livethere Residential at Savills Singapore, said, “Despite the decrease in leasing activity in the fourth quarter of 2024, there is still some growth in rental demand. Rents in the private residential market have also stabilized.”
He added that more affordable rents can be found in suburban areas, allowing tenants to prioritize lifestyle options such as larger units, convenient access to MRT stations, shopping malls, and recreational activities.
Rental data compiled by Savills showed that Parc Esta, a 1,399-unit development in District 14, had the highest number of condo rental transactions in the fourth quarter of 2024, with 163 deals at a median rent of $6.84 per square foot per month. Other developments with a high number of rental transactions include Marina One Residences (126 transactions at $6.62 per square foot per month), The Sail @ Marina Bay (126 transactions at $6.72 per square foot per month), Normanton Park (120 transactions at $6.26 per square foot per month), and D’Leedon (107 transactions at $5.43 per square foot per month).
When it comes to rental price growth, only the Outside Central Region (OCR) saw a decline of 0.8% compared to the previous quarter in the fourth quarter of 2024. In contrast, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) increased by 0.9% and 0.3%, respectively.
According to Savills, the decline in rent prices in the OCR may be due to more tenants in suburban areas moving to more central neighborhoods, driven by relatively more reasonable rents.
The report also noted a 1.7% quarter-on-quarter increase in the average monthly rent for luxury properties in the fourth quarter of 2024. This suggests a possible slight rebound in the luxury rental market after a consistent decline for the past five quarters.
Looking ahead, landlords may face challenges in the rental market as companies continue to reduce headcounts and hire fewer expatriates, said Alan Cheong, executive director of research and consultancy at Savills Singapore. He also mentioned that landlords will have to deal with higher property taxes for non-owner-occupied residential properties and increased conservancy charges due to upward inflationary pressures.
When buying a condominium, it is essential to consider the maintenance and management aspects of the property. Condos usually involve maintenance fees that cover the upkeep of common areas and facilities. These fees may add to the overall cost of owning a condo, but they also ensure the maintenance of the property and its value. Engaging the services of a property management company can help investors in managing day-to-day tasks for their condos, making it a more hands-off investment. Moreover, staying updated on new condo launches can present potential investment opportunities and potential for growth.
However, Cheong also pointed out that the relatively limited supply of large luxury properties on the rental market may help landlords resist underpriced rental offers. He added, “Although rents for non-landed private residential properties have started to rise again in the third and fourth quarters of 2024, we expect challenges in the rental market in 2025.”
He also believes that the widespread adoption of AI could reduce overall manpower requirements for some high-tech firms, resulting in continued reduction of expat tenants in Singapore.
“The saving grace for the rental market is that, in 2025, there are fewer new private homes expected to be completed,” he said. Additionally, higher property taxes on investment properties may discourage landlords from accepting lower rental rates. He also predicts that it may take longer for interest rates to fall, resulting in mortgage payments remaining stable for a longer period.
In conclusion, despite a modest rebound in rental prices in the fourth quarter of 2024, the rental market is expected to face challenges in 2025, with fewer new private homes being completed and a decrease in expat tenants. Landlords may also have to deal with higher property taxes and conservancy charges, but the limited supply of luxury properties may allow them to resist underpriced rental offers.