After seven consecutive months of decline, condominium rents in Singapore experienced a slight rebound in March, supported by a resurgence in leasing demand following the Chinese New Year festivities in February. Initial estimates released by SRX and 99.co on April 18 indicated a recovery in rental volumes for both condominium units and Housing Board (HDB) flats, which had fallen in the previous month.
According to Eugene Lim, key executive officer at ERA, condo rents inched up by 0.3 percent, primarily driven by heightened competition for available units. However, on a year-on-year basis, condo rents still registered a decline of 3.4 percent.
Interestingly, rental volumes increased substantially by 19.1 percent in March, reaching 5,677 units compared to 4,766 units in February. Furthermore, rental volumes were up by 14.9 percent year over year, though they remained 6.9 percent below the five-year average for the month of March.
Industry experts from OrangeTee and ERA Realty attributed the rise in demand for condo rentals to the narrowing price gap between condos and HDBs. As Christine Sun, chief researcher and strategist at OrangeTee Group, stated, this shift has made condos a more attractive option for tenants.
Contrarily, Mark Yip, Huttons’ chief executive, proposed that the increase in leasing demand could be due to landlords compromising on reasonable rental rates rather than leaving their condo units vacant. Mr. Yip also mentioned that the substantial rental gap between HDBs and condos continues to deter tenants from migrating to the market.
Luqman Hakim, chief data and analytics officer at 99.co, echoed this sentiment, explaining that despite the softened condo rental market, HDB rentals remain more affordable than condos, driving the demand for cheaper rentals as inflation rises.
However, Nicholas Mak, chief research officer at Mogul.sg, cautioned against interpreting the March recovery as a reversal of the overall trend of weakening rental demand. Mak emphasized that with the Singapore economy growing slower, there could be a decrease in demand for foreign labor, resulting in lower residential leasing demand for both HDB flats and private housing.
The leasing activity in March was most prominent in the Outside Central Region (OCR), accounting for 36.4 percent of total rental volumes. It was followed closely by the Rest of Central Region (RCR), at 32.6 percent, and the Core Central Region (CCR), at 31 percent.
While rents in the RCR increased by 0.9 percent, rents in both the CCR and the OCR recorded declines of 0.3 percent. Rental prices across all regions declined compared to the previous year, with the CCR observing the steepest decline, at 5.5 percent.
In contrast, HDB rents saw a gain for the second consecutive month, with a 0.6 percent increase from February. Rent hikes were observed across all room types in both mature and non-mature estates. Notably, larger HDB flats commanded higher rents in March, with five-room flats experiencing an increase of 1.5 percent and executive flats rising by 1.3 percent.
Overall, while there are signs of recovery in the condominium rental market, experts urge caution as the trend is susceptible to external factors such as the slower-growing economy and the ongoing supply of newly completed housing units in the years ahead.
