Tariff chaos casts shadow over Singapore’s residential rental market
Leasing volume improves in 2024 as private condo rents ease
[SINGAPORE] The Republic’s residential rental market was poised for a pick-up in 2025, after leasing volume improved last year as rents eased from their pandemic highs. However, the global storm brought on by the onslaught of US tariffs announced in April may have thrown a spanner in the works.
The resultant upheaval in stock markets and warnings of recession have generated unease and chaos. While tariffs were temporarily rolled back for some countries, there is paralysis in decision making and hiring by top business leaders not knowing if their planned investments will be spared.
Singapore is not immune to these shocks and has revised downwards its economic growth, and reduced the pace of appreciation of the Singapore dollar nominal effective exchange rate policy band.
Still, the unfolding uncertainties may well enhance the position of the Republic as a safe haven. Ultra-high-net-worth (UHNW) individuals may choose to relocate to Singapore, which will be a boon to the residential market.
Singapore’s gross domestic product grew 4.4 per cent year on year in 2024, faster than the 1.8 per cent growth in 2023. Growth last year was driven by the wholesale trade, finance and insurance, and manufacturing sectors.
Overall employment of both residents and non-residents rose by 45,000 in 2024 – lower than 2023’s increase of 78,800. Employment growth in 2023 was contributed by a significant increase in Work Permit numbers.
Drivers of rental demand
Rental demand for private homes is largely driven by permanent residents and non-residents, usually on Employment Passes (EPs) and international students. UHNWIs and Singapore citizens account for a small portion.
Data derived from Population in Brief 2024 showed that the non-resident population grew by an estimated 90,000 on an annual basis as at June 2024. Among these non-residents, the international students segment grew the most, by an estimated 20,000, while the number of EP holders probably remained unchanged from 2023.
The government introduced the Overseas Networks & Expertise Pass (One Pass) in 2023. About 3,000 One Passes were issued in 2024, including the conversion of existing EP holders. It is not known how many new One Pass holders are residing in Singapore.
In the face of geopolitical uncertainties and recent memories of the pandemic, many UHNW individuals have chosen to migrate to Singapore. The safe living environment, political stability, top-notch medical care, favourable tax incentives, and world-class education system were some of the key motives behind the move.
According to Henley & Partners’ 2024 World’s Wealthiest Cities Report, an estimated 3,400 millionaires moved to Singapore in 2023.
In a recent UBS Billionaire Ambitions Report released on Dec 5, 2024, Singapore has 47 billionaires with a combined wealth of US$155.5 billion, compared with 41 billionaires with a total wealth of US$135.8 billion in 2023.
Some of these UHNW individuals chose to set up their family offices in Singapore. The Monetary Authority of Singapore estimates that the number of single-family offices (SFOs) exceeded 2,000 by the end of 2024, an increase of at least 40 per cent, from 1,400 SFOs at end-2023.
Which market segments saw more demand?
All market segments saw increased interest in 2024, with the suburban Outside Central Region (OCR) and prime Core Central Region (CCR) seeing the biggest rise.
The estimated number of rental caveats in the CCR was up by 5.7 per cent at 24,108 in 2024, from 22,817 in 2023.
In the OCR, there were 31,603 rental caveats in 2024, 5.5 per cent higher than 2023’s 29,454.
The city fringe Rest of Central Region (RCR) saw an increase of 3.2 per cent in 2024, while rental caveats in the landed homes segment edged up by 1.5 per cent.
While rents of private residential homes eased by 1.9 per cent in 2024, rents for Housing and Development Board (HDB) flats rose 3.6 per cent.
One-bedroom, two-bedroom and five-bedroom units across all regions saw the biggest gains in demand in 2024.
In particular, one-bedroom and two-bedroom units saw more demand as the price gap between smaller condo units and equivalent-sized HDB flats narrowed. Rental demand for smaller units in 2024 has recovered back to 2020 levels.
The average monthly rent of a two-room condo unit in the OCR was estimated at S$3,805 in 2023, around 45.8 per cent higher than that of a three-room HDB flat in the suburbs.
In 2024, the gap narrowed as HDB rents rose. A two-bedroom condo in the OCR averaged monthly rent of S$3,656, about 37.5 per cent above a three-room HDB.
Apart from the price gap, another possible reason for the increase in demand for smaller units is a surge in the number of international students now living in Singapore.
However, tenants renting smaller units appear to be more budget sensitive. In the periods of rapid rising rents in 2022 and 2023, smaller unit types lost tenants at a faster rate.
At the higher end of the rental market, demand is fed by the migration of UHNW investors looking for luxury condos in the CCR and landed homes.
Many UHNW individuals had been looking to buy large format units, but the hefty 60 per cent Additional Buyer’s Stamp Duty on foreigners has damped interest and shifted buying demand to rental.
An estimated 289 non-landed five-bedroom units were rented out in 2024, 23.5 per cent higher than the 234 leased in 2023. For five-bedroom units, volume rose the most in the CCR, with transactions rising 30.2 per cent. The average monthly rent of a five-bedroom unit in the CCR was S$18,023, some 3 per cent lower than 2023’s S$18,573.
Rental volume of four-bedroom units also increased, by 5.5 per cent, to 5,890 in 2024 from 5,581 in the year before. The RCR saw the biggest increase in four-bedroom units leased, with volume rising 8.5 per cent to 1,294 units in 2024. A four-bedroom unit in the RCR had an average monthly rent of S$8,322 in 2024, 3.5 per cent lower than the previous year.
The non-landed residential market however remained hobbled by the limited supply of four-bedroom and larger units.
Using rental caveats from 2020 to 2024 as an estimation on supply, for every four-bedroom and larger unit rented out, there are four three-bedroom units and seven two-bedroom and smaller units rented out.
The number of landed homes rented out in 2024 inched up by 1.5 per cent year on year to 4,957 units, with demand in the CCR growing the most at 3.6 per cent to 1,567 units. It cost an average of S$15,442 a month to rent a landed home in the CCR in 2024, which is 10.3 per cent lower than in 2023.
In the next three years, the CCR will see a lower supply of completed homes. Landlords of CCR homes may see better growth in rents in the coming years.
Mark Yip is CEO and Lee Sze Teck is senior director of data analytics at Huttons Asia
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