Private housing rents to fall 5% y-o-y in 2024: Savills
Savills associates the weaker rents to a range of factors, including an influx of brand-new home finalizations and tougher business conditions that have steered a rise in retrenchments. The headwinds resulted in reduced leasing transactions, with 19,027 agreements registered across landed and non-landed properties island-wide in 4Q2023, low 18.8% q-o-q.
URA’s island-wide leasing mark for non-landed exclusive real estate dropped 1.8% q-o-q in 4Q2023, denoting the initial quarterly decline since 4Q2020. The decline was driven by lower leas with all regions, with the Outside Central Region (OCR) recording the largest autumn q-o-q of 2.8%, followed by the Core Central Region (CCR) at 1.6% and the Rest of Central Region (RCR) at 1.2%.
For the whole of 2023, an overall of 82,257 exclusive real estate estates were leased in 2023, sagging 8.9% y-o-y. This is the least leasing amount since 2016, Savills accentuate. The vacancy rate for exclusive real estate also edged up 2.6 percentage points in 2023, as the net brand-new supply of private homes, amounting to 19,390 units, overtook net need.
In addition, higher home loan prices and real estate tax might trigger some property owners to seek to hand down these expenses to their lessees. Nonetheless, Cheong cautions that proprietors pursuing rents higher than the present market fee might fail to get a renter, given the range of alternatives now offered on the market.
On top of that, Savills indicates that a basket of condominiums tracked by the business observed their overall average month to month lease drop 2.2% q-o-q in 4Q2023, rooted by lower rents for more than half (60.5%) of the apartments. For the whole of 2023, average month-to-month rent grew 3.2% for Savills’ basket of apartments.
Additional finishes in 2024, which Savills determines at 9,636 brand-new units, will place additional downward pressure on rents. Nevertheless, whilst rental rate corrections are on the horizon, property managers with lease contract that are going to expire in the coming months are anticipated to raise rental fees for brand-new agreements, suggests Alan Cheong, executive supervisor for research and consultancy at Savills Singapore. “Landlords who have contract due will probably still obtain a rental uplift because the present rental fees are still greater than those contracted 2 years ago,” he mentions.
The Hill @ One North Singapore
Research by Savills Singapore forecasts that exclusive residential costs will most likely decrease 5% y-o-y in 2024. This goes as leasing event slowed further slowed in 4Q2023, the business highlights in its most current housing subleasing industry record published in February.
Overall, Savills anticipates private domestic rents will drop 5% y-o-y for the entire of 2024.
