Near Zero Rental Growth Expected Year After Condo Rents Dip 17 Y O Y 2024 Savills

: URA

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Private housing rents saw a modest rebound in 4Q2024, rising by a modest 0.2% compared to the previous quarter. However, landlords may not see much growth in rental prices this year, according to a recent market report by Savills Singapore.The private residential leasing market recorded a 1.7% decline in 2024, the first full-year drop since 2020 when there was a 0.5% year-on-year decrease. This was mainly due to the poor performance of the non-landed private residential segment in the first three quarters of 2024.AdvertisementAdvertisementThe number of leasing transactions also fell in 4Q2024, with a decrease of 24.2% compared to the previous quarter. According to Savills, this could be due to a decline in net new rental demand coupled with a seasonal lull in leasing activity towards the end of the year.There were 19,733 leasing transactions in 4Q2024, with rental contracts for landed homes seeing the biggest drop of 30.8% quarter-on-quarter. Leasing volumes for apartments and condos also fell by 23.7% over the same period.“Despite the decrease in leasing activity in 4Q2024, there is still some growth in rental demand and rents in the private residential market have stabilized,” says George Tan, managing director of Livethere Residential at Savills Singapore.He adds that there are still affordable rental options in suburban areas, allowing tenants to prioritize lifestyle choices such as spacious units, proximity to MRT stations, shopping malls and recreational facilities.AdvertisementAdvertisementOut of the list of rental transactions compiled by Savills, Parc Esta, a 1,399-unit development in District 14, recorded the highest number of condo rental deals in 4Q2024. The project saw 163 rental transactions at a median rent of $6.84 psf per month (pm).Other developments with a large 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 average rents decline by 0.8% quarter-on-quarter in 4Q2024. On the other hand, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) saw an increase of 0.9% and 0.3% respectively.AdvertisementAdvertisementThe drop in rent prices in the OCR could be due to more tenants moving from suburban areas to central neighborhoods, driven by more reasonable rental rates.For high-end condos, the average monthly rent increased by 1.7% quarter-on-quarter in 4Q2024, according to Savills’ data. This indicates that the luxury rental market may be seeing a slight rebound after a continuous decline over the past five quarters.However, landlords may still 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 notes that landlords may also face higher property taxes for non-owner-occupied residential properties and increased conservancy charges due to upward inflationary pressures.AdvertisementAdvertisementOne factor that may help landlords resist underpriced rental offers is the tight supply of large luxury properties in the rental market, says Cheong. He expects challenges in the rental market to continue in 2025, despite the turnaround in rents for non-landed private residential properties seen in 3Q2024 and 4Q2024.On the other hand, the widespread adoption of artificial intelligence (AI) could reduce the need for manpower in some high-tech companies, leading to a decrease in hiring of white-collar professionals which may reduce the pool of expat tenants in Singapore, says Cheong.Although there are fewer new private homes expected to be completed in 2025, landlords may face a decline in interest rates, which could result in mortgage payments remaining at current levels for a longer period of time, Cheong notes.Read also: GLS sites at Holland Plain and River Valley Green (Parcel C) open for applicationPrivate housing rents to increase 10% in 2023, contract 5% in 2024: HuttonsHigher property taxes for residential investment property next yearPrivate housing prices down 0.2% q-o-q in 2Q2023, first decline since 1Q2020: URA