Q3/2023 Rental Market Performance

DISTRICT 1 (BOAT QUAY/MARINA/RAFFLES PLACE) MEDIAN RENTAL AT $9,500 PER MONTH FOR A 3 BEDROOM UNIT

Savills Research reports that overall rents in 2023 for residential non-landed could rise by up to 10% due the momentum built up in the first half the year. On a year-to-date (YTD) basis, rents had risen by 7%.

The Core Central Region (CCR) recorded a 6% increase while the Rest of Central Region (RCR) and Outer Central Region (OCR) each rose 8%. Confining the analysis to the popular 1 to 3 bedroom types, rents rose 7% for the CCR and by 8% for the RCR and OCR with the overall increase at 8%.*

On a year-on-year (YoY) basis, rents rose 15%. Among the regions, the RCR rose the most by 17%, followed by the OCR at 15% and then by the CCR at 12%.

District 1 (Boat Quay/Marina/Raffles Place) ranked highest with the Q3 average rent for a 3 bedroom1 at $9,500 per month followed closely by District 4 (Harbourfront/Telok Blangah) with $8,835 and District 9 (Orchard/River Valley) at $8,000. Last quarter, District 4 was highest at $9,330 followed by District 1 at $8,800 and District 9 at $7,900.

Matching these rental changes with what we have been observing on the ground, tenants now have a greater choice of apartments to choose from. With close to 18,000 units completing in 2023, the tight market conditions in 2022 will find relief. Today, there is considerably less pressure on tenants to attempt to close a rental deal because of the ample availability of choices. Also, challenging business conditions and the expansion of manufacturing or regional offices by MNCs in ASEAN is making them relocate foreign professionals to their expanded operations around the region.

However, even with the increase in new supply and the rejigging of foreign staffing policies here, rents are unlikely to fall sharply between now to H1/2024. The strong climb-up in rents from 2022 to Q1/2023 has created a momentum in terms of landlords’ expectations of asking rent.

On a quarter-on-quarter (QoQ) basis, Q3’s rent dipped by 1% with the CCR falling 1% and the RCR and OCR remaining flat.

For 2024, rents may hold firm to perhaps softening by 3% compared to 2023. The continuation of greater supply coming into the market as the effects of the pandemic induced delays plus greater economic headwinds are the main reasons behind that.

Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore:

“Not withstanding pockets of rental weaknesses by location and bedroom types, and a longer period to lease out a vacant unit, the rental market for non-landed private residential properties is surprisingly resilient.”