Private non-landed rents increased 29.7% year-on-year in 2022, highest since 2007.

According to Savills Research, the URA rental index for all private residential properties surged 29.7% year-on-year (YoY) in 2022, which is the highest since 2007. Additionally, the luxury segment of non-landed private residential projects tracked by Savills grew for the eighth consecutive quarter, with a 5.8% quarter-on-quarter (QoQ) increase in Q4 2022, reaching S$5.83 psf, which is the highest since Q2 2008. For 2022, monthly rents of luxury non-landed projects tracked by Savills surged 35.9% YoY, which is the largest yearly growth since the data was collected from 2005.

Parc Esta is the top non-landed project with the highest leasing volume and median rent in Q4 2022. Located in the Rest of Central Region (RCR) at Sims Avenue, Parc Esta recorded 280 leasing transactions and fetched the highest median rent ($7.43 psf). This median rent is notably higher than some older developments in the Core Central Regions (CCR) such as The Sail @ Marina Bay ($6.76 psf) and Marina One Residences ($7.21 psf). (Please refer to Table 1)

Kindly find additional Q4 residential leasing statistics as follows:

RENTS
The rents of private residential properties in Singapore, according to the URA Rental Index, continued its upward trend in Q4 2022, recording its ninth consecutive quarter of increase, albeit at a slightly moderated pace of 7.4% quarter-on-quarter (QoQ), compared to 8.6% in the previous quarter. The non-landed segment recorded an increase of 7.5% QoQ, while landed homes saw an increase of 6.3% QoQ.

In terms of market segments, only homes in the CCR recorded a higher QoQ growth in Q4, increasing by 7.3% compared to the 7.0% in Q3, while rents of homes in the RCR and Outside Central Region (OCR) rose 7.3% and 8.2% QoQ, respectively, lower than the previous quarter's recorded figures of 9.6% and 8.8% recorded respectively in the previous quarter.

For the whole of 2022, the URA rental index for all private residential properties surged 29.7% year-on-year (YoY), the highest since 2007. This rental increase could be attributed to the following factors: limited number of completions at the start of the year and the entry of more foreigners into the market. The increasing number of viewings and the ease of letting have also influenced landlords to raise their asking rents.

Similarly, the luxury segment also recorded a surge in monthly rents, with high-end non-landed private residential projects tracked by Savills registering growth, for the eighth consecutive quarter, increasing 5.8% QoQ to S$5.83 psf in Q4/2022, the highest since Q2/2008 when the average rent was at S$6.01 psf. For the whole of 2022, monthly rents of luxury non-landed projects tracked by Savills surged 35.9% YoY, the largest yearly growth since the data was collected from 2005.

The strong leasing demand for homes, as more high net-worth foreigners enter Singapore, and the lack of available stock and new completions of homes with larger floor areas, have culminated in the strength of the rental market for luxury homes.

Marcus Loo, CEO of Savills Singapore, adds, “Prices for luxury properties, both for purchase and rental, have continued to rise unabatedly, causing a ripple effect in the mid-tier and mass market segments of the real estate market. While some rent adjustments may be expected in H2 2023 due to the completion of more mass market projects, these changes are not going to have any impact on the luxury segment.”

LEASING TRANSACTION VOLUME
Private residential leasing volume in Q4/2022 decreased by 18.9% QoQ to 20,817 transactions, largely due to factors such as the year-end holidays, tenants having already concluded leases, tenants signing on shared accommodation (e.g co-living, renting rooms) and high rents causing foreigners to defer their move. On a YoY basis, rental transactions fell 13.0%, with a significant decrease in both landed and non-landed segments.

For the whole of 2022, the leasing volume of private residential properties decreased 8.5% YoY to 90,261 transactions. The number of rental contracts across the market segments decreased the least in RCR (-4.7%), followed by OCR (-10.3%) and CCR (-10.7%). The smaller fall in the number of rental contracts in RCR may be attributed to more developments completed in the region in 2022.

Notably, two RCR projects - Parc Esta and City Square Residences - were among the top five non-landed projects with the highest leasing volume. These projects are located near MRT stations and amenities, which makes them attractive to tenants.

Parc Esta, located in District 14, recorded the highest number of leasing transactions in Q4 (280) compared to those in Core Central Regions (CCR) such as The Sail @ Marina Bay (144) and Marina One Residences (121). (Please refer to Table 1)

MARKET OUTLOOK
Overall, the private residential leasing market had a successful year in 2022 due to surging demand and a slow stock of rental accommodation. However, economic challenges and the tech industry's restructuring are expected to moderate the rate of rental increase in 2023.

Relief is expected to come only from 2H/2023 when the slowing economy, the reopening of Hong Kong and the fallout in the tech sector starts to work its way through the demand side of the rental market and on the supply side, more new private residential units coming online, but any rent correction is likely to be mild.

The labour market remains healthy, and foreign professionals are still expected to flow into Singapore. The high-end rental market may see a surge due to the 30% Additional Buyer’s Stamp Duty rate levied on foreign buyers and that is motivating them to rent while awaiting their permanent residency or citizenship status.

The forecast for 2023 non-landed private property rents is 5% to 10% for the mid-tier and mass market segment, while luxury apartments may rise by 10% to 15%.

“The economic slowdown is unlikely to derail the inflow of foreigners and although greater supply comes online this year, rents will continue to rise, albeit at a lower rate than last year,” adds Alan Cheong, Executive Director of Savills Research and Consultancy.

Please download the full Residential Leasing Briefing Q4 2022 here