Near Zero Rental Growth Expected Year After Condo Rents Dip 17 Y O Y 2024 Savills
Savills: Private housing rents rebound modestly in 4Q2024 but expected to be flat this yearBy: Jane NgAlthough private housing rents recorded a modest rebound in Q4 2024, inching up 0.2% quarter-on-quarter in the last three months of the year, landlords should expect rental growth to remain flat this year, according to a market report by Savills Singapore.The relatively 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 2024. This is the first full-year decline since the leasing market recorded a 0.5% year-on-year drop in 2020.There were 19,733 leasing transactions in Q4 2024, representing a quarterly decline of 24.2%. Savills attributes this to a decrease in net new rental demand, as well as a year-end seasonal lull in rental activity, in line with a reduction in employment pass (EP) and S pass holders in 2024.Read also: Tourism recovery pushes Orchard Road retail rents up 2.3% y-o-y in Q4 2024: Savills AdvertisementAdvertisementThe report also notes that the bulk of this decline in leasing activity in Q4 2024 came from a 30.8% quarter-on-quarter drop in rental contracts for landed homes islandwide. Leasing volumes for apartments and condos saw a 23.7% quarterly decrease over the same period.“Despite the decrease in leasing activity in Q4 2024, there is still some growth in rental demand, and rents in the private residential market have stabilised,” says George Tan, managing director of Livethere Residential at Savills Singapore. He also adds that more affordable rental options can be found in suburban areas, allowing tenants to prioritize lifestyle options such as bigger units, well-connected locations, malls, and recreational activities.According to Savills data, Parc Esta, a 1,399-unit development in District 14, recorded the highest number of condo leasing deals in Q4 2024 with 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 rental price growth, the Outside Central Region (OCR) was the only region that saw average rents decline by 0.8% quarter-on-quarter. In contrast, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) grew by 0.9% quarter-on-quarter and 0.3% quarter-on-quarter, respectively.Read also: Investment sales volume up 35.4% y-o-y in 2024; expect ease in 2025: Savills AdvertisementAdvertisementSavills also notes that the decline in rent prices in the OCR may be due to more tenants choosing to move from suburban locations to more central areas, drawn by lower rents.Based on a basket of luxury properties tracked by Savills, the average monthly rent of high-end condos increased by 1.7% q-o-q in Q4 2024, to $5.85 psf pm. This suggests that the luxury rental market could see a slight rebound after consistent decline over the preceding five quarters.Looking ahead, landlords may face headwinds in the rental market as companies continue to reduce headcounts and hire fewer expatriates, says Alan Cheong, executive director of research and consultancy at Savills Singapore. He also adds that landlords will be affected by higher property taxes for non-owner-occupied residential properties, as well as increased conservancy charges due to upward inflationary pressures.However, the relatively tight supply of large luxury properties on the rental market may enable landlords to resist “underpriced” rental offers, adds Cheong, noting: “Although rents for non-landed private residential properties turned around in Q3 2024 and continued to rise in Q4 2024, we anticipate challenges in the rental market in 2025.”He also notes that the widespread adoption of AI could potentially reduce the overall manpower required by high-tech firms in the future, leading companies to hire fewer white-collar professionals. This could result in a decrease in the pool of expat tenants in Singapore, predicts Cheong.“The saving grace for the rental market is that for 2025, fewer new completions of private homes are expected,” he says. He also notes that the higher property taxes on investment properties will discourage landlords from accepting “low ball” rental rates. He adds that he expects interest rates to remain at current levels for a longer period, leading to a delay in the decrease of mortgage payments.Read also: GLS sites at Holland Plain and River Valley Green (Parcel C) open for application Advertisement PRINT Get more of your favourite news delivered to your inbox. SEND ME NEWSLETTER All of TODAY’S stories RECOMMENDED FOR YOU FEATURES Private housing prices down 0.2% q-o-q in 2Q2023, first decline since 1Q2020Private housing prices declined for the first time in nine quarters in 2Q2023, falling 0.2% quarter-on-quarter (q-o-q) from the previous quarter, according to the latest data released by the Urban Redevelopment Authority (URA) on July 1. Read more at The Business Times.EP and S pass holders dropped 3.9% y-o-y in 2024: MOMEmployment pass (EP) holders and S pass holders in Singapore fell by 3.9% year-on-year in 2024, in line with the government’s measures to reduce the growth of foreign manpower. Read more at The Business Ti
Private housing rental prices saw a modest rebound in the fourth quarter of 2024, with a slight increase of 0.2% quarter-on-quarter in the last three months of the year, according to a market report by Savills Singapore. However, landlords should not expect much rental growth this year, as the market is expected to remain flat.
The lackluster performance of the non-landed private residential market in the first three quarters of 2024 contributed to a decline of 1.7% in rental prices for the entire year. This is the first time since 2020 that rental prices have seen a full-year decline.
There were 19,733 leasing transactions in the fourth quarter of 2024, which is a decrease of 24.2% compared to the previous quarter. Savills attributes this decline to a decrease in new rental demand, as well as the seasonal lull in rental activity that usually occurs at the end of the year. The number of employment pass (EP) and S pass holders also declined in 2024, which may have affected rental demand.
The report also notes that the drop in leasing activity in the fourth quarter of 2024 was most pronounced for landed homes, with a 30.8% decrease in rental contracts compared to the previous quarter. Leasing volumes for apartments and condos also saw a decline of 23.7% over the same period.
Despite the decline in leasing activity, there is still some growth in rental demand, and rents in the private residential market have stabilized, according to George Tan, managing director of Livethere Residential at Savills Singapore. He notes that more affordable rental options can be found in suburban areas, allowing tenants to prioritize lifestyle factors such as larger units, easy access to MRT stations, malls, and recreational activities.
Based on Savills’ data, the development with the most number of condo leasing deals in the fourth quarter of 2024 was Parc Esta, a 1,399-unit development in District 14. Other developments that saw high numbers of rental transactions include Marina One Residences, The Sail @ Marina Bay, Normanton Park, and D’Leedon.
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In terms of rental price growth, only the Outside Central Region (OCR) saw a decline of 0.8% in average rents in the fourth quarter of 2024. On the other hand, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) saw a growth of 0.9% and 0.3%, respectively.
The decline in rent prices in the OCR may be attributed to more tenants choosing to move from suburban locations to more central areas, attracted by the lower rents. However, the report also notes that the average monthly rent of high-end condos saw a slight rebound in the fourth quarter, increasing by 1.7% quarter-on-quarter to $5.85 psf pm.
Looking ahead, landlords are likely to face challenges in the rental market as companies continue to reduce headcounts and hire fewer expatriates, says Alan Cheong, executive director of research and consultancy at Savills Singapore. He also points out that landlords will be affected by higher property taxes for non-owner-occupied residential properties, as well as increased conservancy charges due to upward inflationary pressures.
However, the tight supply of large luxury properties on the rental market may help landlords resist “underpriced” rental offers. Cheong notes that while rents for non-landed private residential properties have shown signs of improvement in the third and fourth quarters of 2024, there may be challenges in the rental market in 2025.
He also predicts that the widespread adoption of AI could potentially reduce the overall manpower required by high-tech firms in the future, leading to fewer expat tenants in Singapore