Savills Research reports that rents of private residential properties is continuing their uninterrupted run across landed and non-landed properties recording quarterly increases of 10.9% and 8.3% respectively. The rental index of these property types hit record levels in 24 years since the start of the URA time series in Q4/1998.
Notably, the top two projects with the highest non-landed leasing volumes are both newly completed and located in Rest of Central Region (RCR): Park Colonial and Stirling Residences. Stirling Residences (RCR) leads the pack this quarter fetching the highest median rent ($6.93) compared to those in Core Central Regions (CCR) such as The Sail @ Marina Bay ($6.24) and Marina One Residences ($6.64). (Please refer to Table 1)
Kindly find additional Q3 residential leasing statistics here.
LEASING VOLUME
Savills Research reports an uptick in leasing volume this quarter, rising 20.5% quarter-on-quarter (QoQ) to a total of 25,382 transactions, the largest quarterly increase since Q3/2020 when rental transactions rose 34.6% QoQ. This rebound is largely attributed to a 47.6% surge in rental volume of landed homes, increasing from 1,228 transactions in Q2/2022 to 1,812 transactions in Q3/2022. For non-landed homes, there was also a sharp QoQ increase of 18.8% to 23,570 transactions, with the largest increase was observed in Rest of Central Region (RCR) which recorded a 23.5% QoQ to 8,280 transactions.
The top two projects with the highest non-landed leasing volumes are both newly completed and located in RCR: Park Colonial and Stirling Residences. Stirling Residences (RCR) leads the pack this quarter fetching the highest median rent ($6.93) compared to those in Core Central Regions (CCR) such as The Sail @ Marina Bay ($6.24) and Marina One Residences ($6.64). (Please refer to Table 1)
These projects situated in the fringe areas have been increasingly popular with tenants as they are near amenities such as F&B outlets, retail malls and parks and are situated close to MRT stations. As these are newly completed developments, the fittings and amenities within the unit and development are still in pristine condition.
The surge in leasing volume of residential homes came with the return of foreign students and expatriates - as border restrictions and social distancing measures eased - coupled by locals seeking for temporary replacement homes and delays in completion of new homes.
RENTS
Similarly, rents of landed and non-landed properties recorded quarterly increases, surging 10.9% and 8.3% respectively, both recording the highest rental index since the start of the
URA time series in Q4/1998. The interest rate hikes that is ongoing led to landlords increasing rents as their mortgage repayments are expected to increase concurrently.
For non-landed properties, the largest increase in rents was observed in RCR (9.6%), followed by Outside Central Regions (OCR) (8.8%) and CCR (7%). For many, high rents in the CCR may have exceeded their budgets, resulting in relocations to either the RCR or OCR.
Monthly rents for high-end non-landed residential projects tracked by Savills grew for the seventh consecutive quarter, rising 13.1% QoQ to S$5.41 psf. This is highest since Q2/2011 when rents were recorded at S$5.46 psf. More high net-worth foreigners entering Singapore, plus the lack of significant completions and limited stock of larger floor area of homes have resulted in the continual hikes of rents in the prime areas. (Please refer to Graph 3)
OUTLOOK
The rental market is expected to remain tight for the rest of 2022, even with 3,619 units completing in Q4/2022. Come 2023, the supply crunch in the rental market may ease and vacancy numbers may rise when 18,234 new private residential units are completed.
Alan Cheong, Executive Director of Savills Research, adds, “Rent increases may slow in 2023 as demand moderates and new supply comes online.”
However, with pervasive inflation, rents may rise by 5% year-on-year (YoY), albeit at much lower rate than the 25% YoY increase expected for 2022, based on the URA private residential rental index. Based on historical correlations, 2023 will be a crucial year to see if rents will correct because of the confluence of the economic cycle.
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 Q3 2022 here, for your reference.