Private housing rents to fall 5% y-o-y in 2024: Savills
URA’s island-wide rental index for non-landed nonpublic housing dropped 1.8% q-o-q in 4Q2023, marking the first quarterly decline from 4Q2020. The reduction was steered by lower leas in all places, with the Outside Central Region (OCR) recording the largest fall q-o-q of 2.8%, complied with by the Core Central Region (CCR) at 1.6% and the Rest of Central Region (RCR) at 1.2%.
In general, Savills forecasts private residential rents will fall 5% y-o-y for the entire of 2024.
Research by Savills Singapore predicts that exclusive residential rates will reduce 5% y-o-y in 2024. This comes as leasing event slowed down even more slowed in 4Q2023, the firm emphasize in its latest residential renting industry report released in February.
On top of that, greater mortgage fees and real estate tax may motivate some property managers to seek to hand down these costs to their tenants. Nevertheless, Cheong alerts that property managers looking for rental fees higher than the existing market fee may fail to acquire a tenant, given the range of alternatives currently readily available in the marketplace.
Further completions in 2024, which Savills determines at 9,636 brand-new units, will put more descending tension on leas. However, whilst rental cost modifications are on the stretch, landlords with leases that will run out in the coming months are expected to increase leas for new agreements, suggests Alan Cheong, executive director for research and consultancy at Savills Singapore. “Landlords that have rent due will probably still obtain a rental boost due to the fact that the current rental fees are still more than those authorized 2 years ago,” he mentions.
On top of that, Savills indicates that a basket of apartments tracked by the business observed their general common monthly rental fee drop 2.2% q-o-q in 4Q2023, underpinned by lesser leas for more than fifty percent (60.5%) of the condos. For the entire of 2023, standard regular monthly lease expanded 3.2% for Savills’ basket of apartments.
For all of the of 2023, a total of 82,257 reserved housing estates were rented out in 2023, slumping 8.9% y-o-y. This is the least leasing volume since 2016, Savills accentuate. The vacancy rate for exclusive real estate also edged up 2.6 percentage points in 2023, as the net new source of exclusive homes, completing 19,390 units, outstripped final interest.
Savills connects the weaker leas to a variety of variables, including an influx of brand-new home finalizations and harder economic situations that have actually driven a rise in retrenchments. The headwinds resulted in lower leasing deals, with 19,027 agreements listed across landed and non-landed real estates island-wide in 4Q2023, down 18.8% q-o-q.
