Landlord’s Market to Continue in Singapore Residential Leasing

A landlord’s market took hold of Singapore’s residential leasing sector in 2022 and is likely to persist in the new year amid strong leasing demand and tight rental stock, according to PropNex Realty.

Delays in the completion of new condos and build-to-order flats also played a part in restricting condo rental supply and boosting demand for rental housing in the last 12 months, PropNex said in its 2023 Residential Property Market Outlook released last week.

The agency pointed to demand drivers such as tenants who rent while waiting for their new homes to be completed, the return of foreign workers after borders reopened, and a trend towards renting larger apartments to have more privacy and space with the wider adoption of hybrid working.

“Based on transaction data, there were over 75,000 rental contracts for private homes (excluding executive condos) between January and October 2022,” the report said. “PropNex expects the total number of leasing contracts could cross 90,000 — lower than the 98,600 transactions in 2021.”

Rocketing Rents

Singapore’s Urban Redevelopment Authority reported in October that the rental index for private homes reached a record-high 137.9 in the third quarter of 2022 as rents surged 20.8 percent in the first nine months of the year.

In terms of rental value, leasing contracts in the first 10 months of 2022 amounted to $353.6 million and are projected to surpass $400 million for the full year, PropNex said.

For the HDB leasing market, nearly 28,000 rental transactions under the public housing scheme were completed in the first nine months of the year. PropNex expects 36,000 transactions to take place in the whole of 2022, markedly fewer than in previous years.

“The stronger HDB resale activity in 2021 could have contributed to fewer units available for rent,” the report said, noting that a resale flat buyer is barred from renting out the unit until after a five-year minimum occupation period.

Rents at HDB flats also grew by more than 20 percent in the first nine months of the year, keeping pace with private home rentals, as demand remained elevated.

Completions to Aid Stability

In the year ahead, PropNex expects the government to refrain from introducing measures to cool the home leasing market. New completions will add to rental supply and could help to potentially rein in rent growth, leading to a more stable leasing market by the second half of 2023.

“Home leasing activity is not expected to slow significantly in view of the persistent demand drivers and this will lend support to rentals,” the report said.

Challenges for the leasing market include the potential impact of a global recession and slower business expansion. The deteriorating outlook may affect hiring and could crimp the corporate housing budget for expats, according to PropNex.