Landlords to expect flat rental growth in 2025, according to Savills SingaporeAccording to Savills Singapore’s market report, private housing rents have recorded a modest rebound in 4Q2024, inching up 0.2% q-o-q in the last three months of the year. However, landlords should expect rental growth to be flat this year due to the relatively poor performance of the non-landed private residential market in the first three quarters of 2024. This has resulted in rents falling by 1.7% over the whole of 2024, marking the first full-year decline since 2020. The decrease in leasing activity last quarter, with a 24.2% q-o-q drop in transactions, is largely due to a decrease in net new rental demand as well as a year-end seasonal lull in rental activity. Despite this, there is still some growth in rental demand and rents in the private residential market have stabilised. This is especially evident in suburban areas, where relatively more affordable rents allow tenants to prioritise lifestyle options. Among the developments with the most number of condo leasing deals in 4Q2024 are Parc Esta, Marina One Residences, The Sail @ Marina Bay, Normanton Park, and D’Leedon. In terms of rental price growth, the only region that saw a decline in rent prices was the Outside Central Region (OCR), while the Core Central Region (CCR) and Rest of Central Region (RCR) saw an increase. The decline in rent prices in the OCR may be due to tenants shifting to more central neighbourhoods with more reasonable rents. On the other hand, the luxury rental market is showing signs of rebound, with the average monthly rent increasing by 1.7% q-o-q in 4Q2024. However, landlords may face headwinds in the rental market as companies continue to reduce headcounts and hire fewer expatriates, as well as upcoming higher property taxes and increased conservancy charges. With fewer new completions of private homes expected in 2025, landlords may resist “underpriced” rental offers. However, the rental market may face challenges in 2025 due to the relatively tight supply of large luxury properties and the potential reduction of expat tenants. Additionally, interest rates may take longer to fall, resulting in mortgage payments remaining at current levels for longer.
