Singapore’s private residential rents fall 2.2% in May: Savills

THE average median rent for private non-landed homes in Singapore declined 2.2 per cent in May 2023, in contrast to the 2.4 per cent increase in the previous month, the Savills May 2023 Rental Guide indicated.

Savills said the softening of rentals for this one-to-four bedroom category was due to an increase in new housing supply in 2023, as more projects are near completion and construction delay issues have been resolved.

It also noted that the challenging macroeconomic situation has compelled companies to tighten their budgets for staff. Cost-cutting has extended to measures such as a smaller budget for expatriates’ rental use as well as staff layoffs.

Savills’ executive director of research and consultancy, Alan Cheong, commented that the weakening rental is a relief for people seeking to find accommodation, as rental rates “in more districts start to soften”. 

In Cheong’s view, the impact to landlords is marginal as their overall yields remain healthy. Despite weakening in rents, healthy overall yields allow landlords to “effectively counterbalance higher interest costs”. For investors, Cheong added that their financial positions are still well protected as the rental decline remains moderate.

By unit type, the average median rent for a three-bedroom home decreased 3.2 per cent month on month. Year on year, the average median rent increased by 17.8 per cent. 

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In terms of the sub-market with the highest median monthly rents, Savills noted that District 4 was ranked the highest at S$9,300 per month. This includes areas such as Sentosa, Mount Faber, Keppel and Telok Blangah. 

This was followed by District 1 (Chinatown, Boat Quay, Havelock Road, Marina Square, Raffles Place, Suntec City) at S$8,500 and District 9 at S$7,500 (Cairnhill, Killiney, Leonie Hill, Orchard, Oxley).

Marcus Loo, chief executive officer of Savills Singapore, said he believes the period of rising private home rents is over as more homes come onto the market with the passing of the pandemic. 

He added that as economic headwinds strain tenants’ budgets, the rental correction will “allow the market to reset to a more sustainable foundation for the longer-term good of the economy”.