Rents may fall low in H2 2024, before going to a supply lag

The residential rental market had two halves in 2023. The demand for non-landed private homes in the first half 2023 held up against the completions of almost 7,000 units. This was after a 30 percent increase in rents.

Rents increased by 6.2 percent in the first three months of the year. However, signs of a slowdown appeared in the following quarter. It took longer for landlords to find tenants. In tandem with a quiet job market and the slowdown in the private property rental market, the gains in rents have slowed for the third quarter in a row. They reached 2.3 percent in the second quarter 2023.

The market conditions changed in the second half 2023. In H2, a sharp increase in the completion of over 12,000 non-landed private homes coincided with a slowing job market. In the third quarter, rents flattened with a growth of 0.2 percent. Rents fell by 1.8% in the fourth quarter for the first since Q4 2020.

Affinity at Serangoon (1052 units), Avenue South Residences (1.074 units), Kent Ridge Hill Residences (548) Riverfront Residences (1472 units), Riviere 455 units and The Woodleigh Residences 667 units are some of the largest non-landed residential developments completed in H1-2023.

Amber Park (592 unit), Dairy Farm Residences (462 units), Kopar At Newton (378 unit), Leedon Green (638 unit), Midwood (564), Normanton Park (1 870 units), Parc Clementis (1.468 units), Sengkang Grande Residences (680units), The Florence Residences (1 410units), The M (522units) and Treasure at Tampines (2.2203units) are among the largest non-landed residential project completed in H2 of 2023

Rents fell for two consecutive quarters, Q3 and Q4 of 2023, in the Core Central Region. Rents have risen steeply since 2021, driving tenants out of the Core Central Region. They now live in the Rest of Central Region or Outside Central Region.

Rents for private non-landed houses rose by 6.9 percent in 2023. This is a significant decrease from the nearly 30 percent increase seen in 2022.

Seven districts saw median gross rents decline for two consecutive quarters, Q3 and Q4 2023. The biggest decreases were in District 21 (Upper Bukit Timah), District 4 Harbourfront (Telok Blangah) and District 26, Upper Thomson (Springleaf).

In District 21, median gross monthly rents fell by 2.9 percent in Q3 to S$4.10 psf and 8% in Q4. The reason for this was probably due to the influx of non-landed private homes and tenants moving to other districts.


The median gross rents for District 26 fell by 4.8% in Q3 to S$3.48 per square foot per month, and then again by 1.8% in Q4. Rents may have been affected by the fact that District 26 projects tend to be older.

Rents in two distinct regions have risen. Rents for private non-landed houses in District 25 (Kranji and Woodgrove) rose by 16.5% to S$4.61 psf/month, while rents in District 22 (Jurong), grew by 10.3% to S$4.92 per sq m/month.

Rents in two distinct regions jumped dramatically in H2. In H2 2023, the median rents for private non-landed houses in District 25 (Kranji and Woodgrove) rose by 16.5% to S$4.61 psf/month, while District 22 (Jurong), rose by 10.3% to S$4.92 per psf/month. The lack of new supply in these areas supported rents, while Woodgrove Estates are typically in high demand because they are close to the Singapore American School.

The median gross rents in District 4 fell by 5.7 percent in Q3 to S$5.28 per square foot per month, and then by 1.1 percent in Q4. The number of non-landed private homes that are rented in Sentosa has increased, but the median gross rents per square foot tend to fall in comparison to smaller units.

Rents rose 54,7% between Q4 2018 and Q4 2023 while prices only grew by 32.3%. Rents grew faster than capital values in Q4 2018 and Q4 2023, resulting in an estimated gross rental yield of non-landed private homes that improved all over the island.

According to Huttons’ calculations and estimates, the District 25 (Kranji and Woodgrove) was estimated to have a gross rental yield of 5 percent as at Q4 2020. The next highest was District 22 (Jurong), at 4.5 percent, followed by District 2 (Anson Tanjong Pagar), and District 8 Little India at 4.2 percent.

Rents will rise in the coming years due to a lower supply of private residential non-landed rentals.

Rents could remain low in H1 2024 as the market absorbs excess non-landed private homes. In 2024, the estimated supply of non-landed private homes will be 9,636 units. This is half of 2023’s 19,390 unit total. The average annual supply from 2024-2028 is estimated at 6,789 units, a decrease compared to the 8,119 units per year in the five previous years.

The demand for tenants may increase in 2024 due to a better economic growth. The rental market will therefore bottom out in H2 of 2024, and then recover.

Read more on : Sora Condo

Recently, a new category of serviced apartments for long-term stays was introduced to meet the short-term demand. This type of accommodation will not directly compete with the standard leases provided by private property owners.

The operators of serviced apartments usually include utilities and housekeeping in their packages. They also cover maintenance costs. This keeps the serviced apartment rates above those for standard residential leasing.

To address the shortage of housing, the government announced that the occupancy cap on larger units would be temporarily relaxed from January 22, 2024 until December 31, 2026. Landlords must also consider the higher taxes that they will have to pay due to recent tax rate increases, and any wear and tear caused by housing more people. The inconvenience that comes with sharing bathrooms, dining and living areas will be a consideration for tenants. It is therefore likely that there will be minimal impact.

District 25 (Kranji and Woodgrove) is likely to continue doing well over the next few decades, since there have been no new private non-landed houses built in this area since 2015.

The Johor Singapore Special Economic Zone will be implemented in 2026, and it is expected to strengthen the economic ties between Singapore and Johor. This could lead to more businesses setting up in Woodlands or Johor. This would spur the development of Woodlands Regional Centre, and increase demand for housing in District 25. Rents and capital gains may increase as a result.

Investors should keep an eye out for a new project that will be launched along Champions Way in Woodlands, 2024.



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