Uncertainty over hiring, relocation clouds outlook for Singapore rentals after brisk Q3: Savills

[SINGAPORE] Singapore’s private residential market saw a jump in leasing activity during the third quarter of 2025, with volume rising to its highest in four years. However, the momentum may not hold up with ongoing business uncertainty, Savills said. 

“While the strong rental showing and the decline in vacancies appear to show a resilient leasing market, it may be masking hidden weaknesses,” said Savills Singapore in a report issued on Nov 17. 

According to data collated by Savills, leasing volume jumped 24.2 per cent in Q3 to 26,882 contracts for private homes, excluding executive condominiums, compared with the previous quarter. Year on year, leasing activity was 3.2 per cent higher. Q3 2025 also showed the highest quarterly volume since Q3 2021, when 27,145 contracts were registered.

Leasing activity generally peaks in Q3 with an influx of expatriates and international students, in line with global corporate relocation cycles and academic calendars. 

These inflows may be thinning with “a gradual contraction” in Singapore Employment Pass (EP) numbers since 2024. Savills pointed to latest statistics showing that the number of EP holders declined from 205,400 in December 2023 to 202,100 in December 2024, and fell further to 201,200 by June 2025.

The decline reflects the impact of tightened policies on hiring and higher qualifying salaries, “which aim to strengthen the local workforce but make it more challenging for foreign professionals to qualify”, the report said. Hiring and relocation trends have a direct impact on the leasing market, as pass holders make up a significant source of rental demand.

For new EP applications from Jan 1, 2025, and for renewals of passes expiring from Jan 1, 2026, the minimum qualifying salary is now S$5,600, increasing progressively with age up to S$10,700 at 45 and above. For employees in financial services, the threshold is higher – from S$6,200, up to S$11,800 at age 45 and above.

In particular, Savills noted that a year-on-year drop in leasing for landed homes in Q3 “may reflect a shrinking pool of senior-level expatriate professionals and their families, as well as reduced housing allowances due to company cost-control measures amid ongoing global economic uncertainty”.

Islandwide, leasing for landed homes fell 7.6 per cent from the year-ago quarter. In contrast, leasing activity for condos continued to rise by about 4 per cent.

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“All may be well with the leasing market for now, but the road ahead is clouded by business uncertainty,” said Alan Cheong, executive director, research and consultancy, Savills Singapore.

In the high-end market, average monthly rents of projects tracked by Savills inched up 0.7 per cent to S$6.03 psf in Q3, in a “notable slowdown” from the 1.7 per cent increases in the first quarter and fourth quarter of 2024. 

“This deceleration suggests that rental growth in this segment may be losing momentum,” Savills said, “possibly due to a smaller population of senior expatriate professionals and their families, amid heightened macroeconomic uncertainties at the global level and challenging business conditions”.

In a similar vein, Knight Frank said that despite low vacancy rates, landlords are growing wary and defensive. “Job security is becoming less uncertain for employees in industries that are increasingly affected by the rapid changes in the world. Higher cost-of-living concerns are also threatening to reduce Singapore’s appeal to foreign professionals,” the consultancy explained.

An OrangeTee report noted that while the unemployment rate continues to be low in Singapore, hiring trends are uneven across sectors. The health and social services sectors are seeing growth, for instance, but others such as the professional services and tech sectors face job cuts. 

The Urban Redevelopment Authority’s rental index of all non-landed private homes rose 1.1 per cent in Q3, slightly faster than the 0.8 per cent rise in the second quarter. This was the fifth straight quarter of rental growth since Q3 2024 and the highest quarterly increase in rents over the period, Savills added. 

Year to date, rents are up 2.4 per cent in Q3, reversing from a 1.9 per cent decline over the same period last year. Overall occupancy rate ticked up to 93.1 per cent in Q3, from 92.9 per cent in Q2.

However, market movements were uneven. Rents rose with fresh supply in the suburban Outside Central Region (OCR) by 2.5 per cent quarter on quarter, and similarly went up in Rest of Central Region (RCR) city fringe locations by 1.8 per cent. 

In contrast, the prime Core Central Region saw rents decline by 0.5 per cent, after three consecutive quarters of increases since Q4 2024. 

Supply expanded in Q3, with the completion of 1,776 new private homes (excluding ECs), up from 341 in Q2. Several other projects obtained their temporary occupation permits, including the 605-unit Lentor Modern, 407-unit Piccadilly Grand at Farrer Park, and 364-unit One Bernam in Tanjong Pagar. 

Normanton Park, located near Kent Ridge Park in District 5, was the most popular non-landed residential project, with 199 leasing deals recorded in Q3. This was followed by Midtown Modern in District 7’s Bugis area, with 157 lease transactions, and The Sail @ Marina Bay in District 1, with 156 transactions. 

Looking ahead, Savills believes that the pace of leasing activity is likely to moderate since business uncertainty remains elevated. “Companies may soon begin taking remedial action to reduce operation costs even more significantly than before,” it noted. 

Although the URA rental index has increased 2.4 per cent year-to-date, Savills maintains its forecast for rents to remain flat in 2025. Knight Frank expects rental growth to range between 1 and 3 per cent in 2025.