Savills Research reports that rents are continuing the upward trajectory with monthly rents for high-end non-landed private residential projects at the highest since Q1 in 2014, clocking in a 7.6% Quarter-on-Quarter (QoQ) increase.
Rents have been on the rise for the sixth consecutive quarter, at $4.79 psf in Q2. The dearth of significant completions islandwide have allowed landlords to dictate rents. This is more pronounced in the prime districts.
The URA rental index for all private residential properties surged 6.7% QoQ, with that of non-landed properties registering a larger 7.1% expansion compared to the 3.2% for landed properties. For non-landed properties, this was the largest QoQ growth since Q3/2007 when rents rose 11.9% QoQ. Across market segments, non-landed home rents in the Core Central Region (CCR) and Outside Central Region (OCR) grew the fastest at 7.7% each. Similarly, rents of non-landed homes in Rest of Central Region (RCR) rose 5.9% QoQ.
Alan Cheong, Executive Director of Research at Savills Singapore adds,“Although the central scenario is for rents to continue barrelling up, global recessionary conditions could dampen the super bull cycle.”
Conversely, leasing volume of high-end private residential properties declined on a QoQ basis for the third consecutive quarter by 8.7% to 20,751 transactions, compared to the 5% decline in Q1. On a year-on-year (YoY) basis, the number of rental contracts fell by 13.3%. This contraction in leasing volume does not indicate slower rental demand but it may be due to limited completions, affected by construction delays.
Leasing volume of high-end non-landed homes also fell 8.7% QoQ to 19,545 transactions, the first quarter when rental volume fell below 20,000 since Q2/2020. The decline is spread across all three market segments, particularly for Core Central Region (CCR) which fell 13.3% QoQ to 5,780 transactions. The moderated contraction in the city-fringe and suburban areas, as compared to that in the prime districts, may be due to more available stock to meet demand.
Overall, rental contracts of private residential properties trended downwards for the third consecutive quarter while rental growth rose strongly. Nevertheless, for 2022, with islandwide private residential rents having already gone up by 11.7% in the first half of the year, we revise our forecast from 10% - 15% to a 15% - 20% YoY change. For 2023, rental increases are likely to continue with a 5% YoY rise.
Savills Research provides in-depth analysis of property market trends, forecasts from our professional research team and market commentary to help you make the right property decisions. Please find the Residential Leasing Briefing for Q2 2022 here, for your reference.