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

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Savills Singapore expects private housing rents to remain flat in 2025 despite a modest rebound in 4Q2024. Although rents in the non-landed private residential market increased by 0.2% q-o-q in the last quarter of 2024, the overall rental growth for the year was flat, with a 1.7% decline compared to 2020.This marks the first full-year decline since the leasing market recorded a 0.5% year-on-year drop in 2020, largely due to the relatively poor performance of the non-landed private residential market in the first three quarters of 2024.According to a market report by Savills Singapore, there were 19,733 leasing transactions in 4Q2024, representing a decline of 24.2% compared to the previous quarter. The decrease in rental activity can be attributed to a decrease in the number of employment pass (EP) and S pass holders last year, as well as a seasonal lull in rental activity towards the end of the year.However, George Tan, managing director of Livethere Residential at Savills Singapore, notes that there is still some growth in rental demand despite the decrease in leasing activity. Rents in the private residential market have also stabilised, he adds.Suburban areas with relatively more affordable rents have become more attractive to tenants, allowing them to prioritize lifestyle options such as larger units, proximity to MRT stations, shopping centers, and recreational activities.According to rental data compiled by Savills, the development with the most condo leasing deals in 4Q2024 was Parc Esta, with 163 transactions at a median rent of $6.84 psf per month. Other projects with a high volume of rental transactions include Marina One Residences, The Sail @ Marina Bay, Normanton Park, and D’Leedon.In terms of rental price growth, the Outside Central Region (OCR) was the only region to see a decline in average rents, at 0.8% q-o-q. In contrast, the Core Central Region (CCR) and Rest of Central Region (RCR) saw growth of 0.9% q-o-q and 0.3% q-o-q, respectively.According to Savills, the decrease in rent prices in the OCR is likely due to more tenants moving to central neighborhoods where rents are relatively more reasonable. However, based on a basket of luxury properties tracked by Savills, the average monthly rent of high-end condos increased by 1.7% q-o-q in 4Q2024, potentially indicating a slight rebound in the luxury rental market after a consistent decline over the previous five quarters.Looking ahead, landlords may face challenges in the rental market as companies continue to downsize and hire fewer expatriates. Additionally, higher property taxes for non-owner-occupied residential properties and increased conservancy charges due to inflationary pressures may put pressure on landlords.However, the relatively tight supply of large luxury properties on the rental market may help landlords resist low rental offers. Alan Cheong, executive director of research and consultancy at Savills Singapore, notes that despite the turnaround in rents for non-landed private residential properties in 3Q2024 and continued growth in 4Q2024, the rental market is likely to face challenges in 2025.There may be fewer new completions of private homes in 2025, providing some relief in terms of supply. Higher property taxes on investment properties may also discourage landlords from accepting low rental rates, and interest rates are expected to remain steady, potentially helping to keep mortgage payments at current levels.Despite the modest rebound in 4Q2024, Savills Singapore expects private housing rents to remain flat in 2025, with landlords facing challenges due to the decrease in expat tenants and potential difficulties in securing good rental rates. However, fewer new completions and higher property taxes may offer some cushioning for landlords.