Perched on the side of the road, the real estate market has been on a rollercoaster ride in 2024. However, the latest market report from Savills Singapore indicates that landlords can expect flat rental growth in the coming year despite a modest rebound of 0.2% q-o-q in private housing rents in 4Q2023.In 2023, the non-landed private residential market recorded modest declines in the first three quarters, contributing to an overall decrease of 1.7% for the entire year. This marks the first full-year decline since the leasing market saw a drop of 0.5% y-o-y in 2020.According to Savills, the decrease in net new rental demand last year, coupled with a seasonal slowdown in rental activity towards the end of the year, has resulted in a quarterly fall of 24.2% in leasing transactions, with a total of 19,733 transactions in 4Q2023.This decline in leasing activity has been attributed to a 30.8% q-o-q decrease in rental contracts for landed homes across the island, as well as a 23.7% q-o-q decrease in leasing volumes for apartments and condos.“Despite the overall decrease in leasing activity in 4Q2023, there is still some growth in rental demand, and rents in the private residential market have stabilized,” says George Tan, managing director of Livethere Residential at Savills Singapore.He adds that the suburban areas offer relatively affordable rents, allowing tenants to prioritize lifestyle options such as larger units, proximity to MRT stations, malls, and recreational activities.According to rental data compiled by Savills, Parc Esta, a 1,399-unit development in District 14, saw the most condo leasing deals in 4Q2023, with a total of 163 transactions and a median rent of $6.84 psf per month (pm). Other high-performing developments include Marina One Residences (126 transactions at $6.62 psf pm), The Sail @ Marina Bay (126 transactions at $6.72 psf pm), Normanton Park (120 transactions at $6.26 psf pm), and D’Leedon (107 transactions at $5.43 psf pm).In terms of rental price growth, the Outside Central Region (OCR) was the only region to experience a decline of 0.8% q-o-q in average rents in 4Q2023. In contrast, rents in the Core Central Region (CCR) and Rest of Central Region (RCR) saw an increase of 0.9% q-o-q and 0.3% q-o-q respectively.According to Savills, this decline in rental prices in the OCR could be attributed to an influx of tenants from suburban areas to more central neighborhoods in search of more reasonable rents.Based on a basket of luxury properties tracked by Savills, the average monthly rent of high-end condos increased by 1.7% q-o-q in 4Q2023 to $5.85 psf pm, indicating a possible rebound in the luxury rental market after five consecutive quarters of decline.Looking to the future, landlords may face challenges in the rental market as companies continue to reduce headcount and hire fewer expatriates, says Alan Cheong, executive director of research and consultancy at Savills Singapore. In addition, landlords might also face higher property taxes for non-owner-occupied residential properties and increased conservancy charges due to inflationary pressures.However, although the rental market saw a turnaround in 3Q2023 and continued its rise in 4Q2023, challenges are expected to persist in 2025 due to fewer new completions of private homes this year. Furthermore, the fear of high property taxes on investment properties could turn landlords away from accepting below-market rental rates. Cheong also predicts that low-interest rates may take longer to decline, leading to a longer period of continued mortgage payments.The adoption of AI could lead to a decrease in manpower requirements for high-tech firms, resulting in a decrease in the number of white-collar professionals employed and a possible reduction in the expat tenant pool, says Cheong.However, he also adds that the current slow growth in rental prices may be a saving grace for landlords. With fewer new completions of private homes expected in 2025, they can expect to resist undervalued rental offers while waiting for interest rates to fall.
Ultimately, purchasing a condo in Singapore presents a multitude of benefits, including a high demand for the property, potential for significant capital appreciation, and appealing rental yields. However, it is crucial to carefully consider various factors such as location, financing options, government regulations, and current market conditions. Through conducting extensive research and seeking guidance from professionals, investors can make well-informed decisions and maximize their returns in Singapore’s ever-evolving real estate market. Whether you are a local looking to diversify your investment portfolio or a foreign buyer in search of a stable and profitable opportunity, investing in condos in Singapore, such as those offered by Singapore Projects, presents a compelling opportunity to achieve your goals.