: URA Keywords Savills Singapore, private residential market, rental market, rental demand, rental prices, rental transactions, leasing marketSavills Singapore expects flat rental growth for private residential market this yearAlthough private housing rents recorded a modest rebound in 4Q2024, inching up 0.2% q-o-q in the last three months last year, landlords should expect rental growth to be 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 represents the first full-year decline since the leasing market recorded a 0.5% y-o-y drop in 2020.There were 19,733 leasing transactions in 4Q2024, which marked a quarterly decline of 24.2%. According to Savills, this is likely due to a decrease in net new rental demand as the number of employment pass (EP) and S pass holders fell last year, in combination with a year-end seasonal lull in rental activity.It noted that the bulk of the decline in leasing activity last quarter stemmed from a 30.8% q-o-q drop in rental contracts for landed homes islandwide. Leasing volumes for apartments and condos also saw a 23.7% q-o-q decrease over the same period. However, despite the decrease in leasing activity, Savills added that there is still some growth in rental demand as rents in the private residential market have stabilised.However, landlords should expect flat rental growth this year, with relatively more affordable rents found in suburban areas, which enable tenants to prioritize lifestyle options such as more spacious units, connectivity to MRT stations, malls, and recreational activities. In 4Q2024, Parc Esta emerged as the development with the most number of condo leasing deals, recording 163 rental transactions at a median rent of $6.84 psf per month.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) saw average rents decline by 0.8% q-o-q in 4Q2024. Meanwhile, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) grew by 0.9% q-o-q and 0.3% q-o-q, respectively, reflecting the trend of tenants in suburban locations shifting to more central neighborhoods, driven by relatively more reasonable rents.Savills also observed a slight rebound in the luxury rental market, with the average monthly rent of high-end condos increasing by 1.7% q-o-q in 4Q2024 to $5.85 psf pm. The luxury rental market had previously seen consistent declines in the preceding five quarters.However, looking ahead, landlords will likely 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 adds that landlords also face higher property taxes for non-owner-occupied residential properties, as well as increased conservancy charges due to upward inflationary pressures.Despite the challenges, the relatively tight supply of large luxury properties on the rental market may help landlords resist underpriced rental offers, according to Cheong. Additionally, he expects that interest rates will likely take longer to fall and result in mortgage payments to remain at current levels for longer.The saving grace for the rental market in 2025, according to Cheong, is the fewer new completions of private homes expected. Higher property taxes on investment properties will also turn landlords off from accepting low ball rental rates. Furthermore, he anticipates that the pool of expat tenants may reduce as a result of the widespread adoption of AI reducing overall manpower requirements for some high-tech firms and companies continuing to reduce hiring of white-collar professionals.
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