Stirling Residences by Logan Properties and Nanshan Group was among the most active projects in the quarter
Residential rents rose at the highest rate ever recorded in Singapore during the third quarter, according to a new report by Savills analysing government data.
Leasing rates for landed and non-landed properties in the Little Red Dot surged 10.9 and 8.3 percent respectively in the period from July through September, both recording the highest rental index since the Urban Redevelopment Authority began the time series in 1998, the property consultancy showed.
The upswing in leasing prices came with the return of foreign students and expatriates as border restrictions and social distancing measures eased, coupled with locals seeking temporary housing amid delays in completion of new homes, Savills said, while noting that the surge may prove transitory as the city returns to normal post-pandemic.
“Rent increases may slow in 2023 as demand moderates and new supply comes online,” said Alan Cheong, head of research and consultancy at Savills Singapore.
Relocations From Core
Residential leasing volume in the July-September quarter shot up 20.5 percent from the previous three-month period to a total of 25,382 transactions, the largest increase since the third quarter of 2020, snapping a streak of three straight quarters of decline, Savills said.
For non-landed properties, the largest increase in rents was observed in the Rest of Central Region with a 9.6 percent rise, followed by the Outside Central Region (8.8 percent) and the Core Central Region (7 percent).
Alan Cheong, head of research and consultancy at Savills Singapore
“For many, high rents in the CCR may have exceeded their budgets, resulting in relocations to either the RCR or OCR,” Savills said.
The two projects with the highest non-landed leasing volumes were both newly completed and located in the RCR: Stirling Residences, a joint venture of China’s Logan Properties and Nanshan Group, and Chip Eng Seng’s Park Colonial, with 378 and 184 transactions respectively.
Stirling Residences fetched the highest median rent in the quarter at S$6.93 (now $5.03) per square foot per month, eclipsing rates at downtown developments like Marina One Residences (S$6.64) and The Sail @ Marina Bay (S$6.24).
Rents for high-end non-landed projects tracked by Savills grew for the seventh straight quarter, rising 13.1 percent from second-quarter levels to S$5.41 per square foot per month, their highest since hitting S$5.46 in the second quarter of 2011.
The influx of high-net-worth foreigners into Singapore, a lack of significant completions and the limited stock of homes with a larger floor area have resulted in continual rent hikes in prime areas, the agency said.
New Supply Next Year
Savills predicts the rental market to remain tight for the rest of 2022, even with 3,619 units to be completed in the fourth quarter of the year. The supply crunch may ease in 2023 when 18,234 new private residential units reach the market.
After the 25 percent year-on-year increase anticipated for 2022, rents are seen moderating to a 5 percent rise next year.
“Based on historical correlations, 2023 will be a crucial year to see if rents will correct because of the confluence of the economic cycle,” Savills said.
In the investment market, Singapore’s residential sector is the only major real estate segment to show significant yield expansion in 2022, thanks to rapidly rising rents, according to the agency.
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