Copywriting Proposal:Savills Singapore reports that private housing rents have experienced a modest rebound in the last quarter of 2024. However, landlords should anticipate flat rental growth in the upcoming year. The market report highlights the underwhelming performance of the non-landed private residential sector in the first three quarters of 2024, which led to a 1.7% decline in rents for the entirety of the year – the first decline in full-year rental since 2020. In the fourth quarter, there were 19,733 leasing transactions, marking a 24.2% drop from the previous quarter. This decrease can be attributed to a decrease in net new rental demand from a decline in employment pass and S pass holders, as well as a seasonal lull in rental activity towards the end of the year. The report also states that the majority of this decline in leasing activity can be seen in the decrease of rental contracts for landed homes islandwide, with a 30.8% drop from the previous quarter. Similarly, leasing volumes for apartments and condos also saw a 23.7% decrease over the same period. Despite this decrease in leasing activity, Savills Singapore notes that there is still some growth in rental demand and that rents in the private residential market have stabilized. The report also highlights that more affordable rents can be found in suburban areas, enabling tenants to prioritize lifestyle options such as more spacious units, connectivity to MRT stations, malls, and recreational activities. Rental data collected by Savills reveals that Parc Esta, a 1,399-unit development in District 14, recorded the highest number of condo leasing deals in the fourth quarter of 2024 at 163 rental transactions, with a median rent of $6.84 psf per month. Other developments that saw a high number 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) saw average rents decline by 0.8% q-o-q, while 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. Savills attributes the decline in rent prices in the OCR to more tenants shifting to central locations with relatively reasonable rents. The report also notes that 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 the fourth quarter of 2024 to $5.85 psf pm. This suggests a potential rebound in the luxury rental market after five consecutive quarters of decline. However, Savills predicts that landlords will face challenges in the rental market this upcoming year as companies continue to reduce headcounts and hire fewer expatriates. In addition, landlords will also face higher property taxes for non-owner-occupied residential properties and increased conservancy charges due to upward inflationary pressures. Despite these challenges, Savills notes that the tight supply of large luxury properties on the rental market may help resist “underpriced” rental offers. However, Savills’ executive director of research and consultancy, Alan Cheong, believes that the rental market will face difficulties in 2025 due to the widespread adoption of AI and companies continuing to reduce the hiring of white-collar professionals. This may result in a decrease in the pool of expat tenants in Singapore. In terms of the rental market, Cheong predicts that there may be fewer new completions of private homes in 2025, and higher property taxes on investment properties will discourage landlords from accepting “low ball” rental rates. He also expects interest rates to take longer to fall, resulting in mortgage payments remaining at current levels for a longer period.
Investing in property in Singapore as a foreigner requires a thorough understanding of the regulations and limitations in place. While condos are generally open for purchase by foreigners, restrictions are tighter for landed properties. Nevertheless, the appeal of Singapore’s real estate market, with its stability and potential for growth, continues to attract foreign investors. However, it’s important to note that foreign buyers are subject to the Additional Buyer’s Stamp Duty (ABSD) of 20% for their first property purchase. Despite this extra cost, Singapore Projects remain a popular option for foreign investment.