Savills Research shares that the leasing volume of private residential units has increased by 3.1% on a yearly basis. On a quarterly basis, the private residential leasing volume has increased further by 1.7% in Q2, following a 5% rise in Q1.
The increase was observed in the non-landed property segment which rose by 1.9% quarter-on-quarter (QoQ). Rental transactions are seen to expand in the Core Central Region (CCR) and the Rest of Central Region (RCR), with increases of 3.3% and 3.2% QoQ, respectively.
Interestingly, the growth in these two market segments is mostly driven by a higher demand for one- and two-bedroom units from tenants who were priced out of these market segments over the past few years and had moved to either HDB or co-living premises. Leasing volume of one- and two-bedroom units in the CCR rose by 14.2% and 7.0% QoQ, respectively. In the RCR, rental contracts for one- and two-bedroom units expanded by 5.2% and 7.6% QoQ respectively.
Top three non-landed properties with the highest leasing volume this quarter are: Treasure At Tampines, Normanton Park and Leedon Green. (See Table 1)
1,882 newly completed private residential units entered the market during April-June 2024. Three 99-year leasehold condominium projects developed on government land sales (GLS) sites — Clavon at Clementi Avenue 1, Midtown Bay on Beach Road, and One-North Eden at Slim Barracks Rise – comprised 54.4% of the quarter’s new completions. The CCR accounted for the highest proportion of new stock (50.1%) in the quarter. (See Table 2)
Island-wide stock of private residential units increased by 0.4% QoQ in the second quarter, reversing the contraction from Q1. With increasing leasing activity and more owners moving into their newly completed homes, the net demand for island-wide private residential units has significantly outpaced the corresponding net supply for this quarter.
Overall vacancy rate for private homes fell by 0.7 of a percentage point (ppt) QoQ to 6.1%. On a quarterly basis, the vacancy rate in the OCR dropped the most, by 1.1%, followed by the RCR at 0.8%. Meanwhile, the CCR recorded a 0.4% QoQ increase in vacancy rate. This is mainly due to a substantial number of completions during the quarter.
George Tan, Managing Director, Livethere Residential, Savills Singapore says, “With the drop in vacancy rate and completed new stock coming in the market, we can see a marginal optimistic movement in the market. Rents continue to stabilise. For owners of the smaller units, we can see that there is demand for it and they will likely be able to command a reasonable rent on a per square foot basis.”
Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore adds, “The game of ‘musical chairs’ is unfolding in the rental market as softer rents are motivating tenants to move in search of lower cost apartments. The supply of units from new completions is also providing ample options for tenants. Simply put, while more supply is continuing to be released to the market and tenants continue to have budget constraints, the lower rents are likely to see a greater migration of tenants from the public flat market and single room lettings to whole apartment leasing. Ultimately, we believe that rents may find a floor by the end of this year.”
For further information, please contact Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore and George Tan, Managing Director, Livethere Residential, Savills Singapore as the details below.
