Average Median Rentals For 3 Bedroom Unit In Districts 7 (Beach Road/Bugis/Rocher), 26 (Mandai/Upper Thomson) & 11 (Newton/Novena) In Q1 Increased By 9.8%, 8.5% & 8.2% Respectively From Q4
Savills Research shares that rents in the first quarter are lower than they were a year ago. While Districts 1 (Boat Quay/Marina/Raffles Place), 4 (Harbourfront/Telok Blangah) and 9 (Orchard/River Valley) hold the top 3 average median rental for 3-bedroom units in the first quarter, overall rents have dropped by 1.3% on a year-on-year (YoY) basis. This is a harbinger of the projected 5% drop YoY.
The biggest drop in average median rental in Q1 was experienced by District 2 (Chinatown/Tanjong Pagar) by 12.3%, followed by Districts 5 (Buona Vista/West Coast/Clementi) and 3 (Alexandra/Commonwealth) by 8.6% and 6.1% respectively.
Continuing their decline from the last quarter, rents for non-landed properties dropped even further in the first quarter. After eliminating outliers*, rents for non-landed properties fell by 1.8%** quarter-on-quarter (QoQ) for all bedroom types. The change last quarter was 1.5%.
Rents for the more popular rental types (1- to 3-bedroom units) fell even more, sliding 2.1% QoQ, with average median rental dropping the most for the 3-bedroom*** types (2.6%). 1- to 3-bedroom rental in the Core Central Region (CCR) fell 1.4%, and the Rest of Central Region (RCR) and Outside Central Region (OCR) slipped 3.5% and 1.8% respectively.
On a year-on-year (YoY) basis, average rents fell 1.3% for all bedroom types in 2024, compared with an increase of 4.8% in 2023. The CCR fell the most by 2.2%, followed by the RCR at 1.2% and the OCR at 0.8%.
Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore comments, “So far, rents have been adjusting downwards in a well-mannered fashion and we believe one of the reasons for this is that landlords had not been panicking to sign on tenants at low ball offers. This could be due to lagged behaviour effects when landlords, in 2022, were slow to adjust rents upwards when the available stock for lease was dwindling fast. Now, the same may be playing out when landlords who saw themselves missing out on the rental bonanza last year just after their 2022 vintage leases were signed, now wanted to be recompensed for the opportunity costs.”
“Nevertheless, our roving marketing professionals are providing feedback that fewer viewings are now scheduled for each unit available for lease and an increasing number of tenants are playing musical chairs trying to source for the cheapest accommodation or one that is of the same rent as what they had signed on previously,” he adds.
George Tan, Managing Director, Livethere Residential, Savills Singapore says, “We are expecting about 9,600 units of new private residential housing in 2024. As this number is significantly lower than the 19,376 units that were completed in 2023, it may reduce the pressure to lower rents.”
*: Outliers are those having about more than 2 standard deviations of rental change from the average.
**: The average is taken to the average of the 25th, 50th and 75th percentile combined.
***: The size of 3-bedroom units can vary across market segments, ranging from 900 to >1100 square feet in the mass market and mid-tier market. In luxury district condos, sizes typically range from 1,500 to 2,000 sq ft while super luxury apartments for example in Sentosa, sizes can exceed 3,000 sq ft.