Rents for luxury homes in Singapore jump in Q1 despite wider market slump: Huttons (2024)

Rents for luxury homes in Singapore jump in Q1 despite wider market slump: Huttons (1)

Samuel Oh


May 03, 2024, 05:33 PM


May 03, 2024, 08:06 AM

SINGAPORE – Rents for large luxury homes in Singapore jumped in the first quarter, in contrast to an overall slump in the wider market, as demand from high-net-worth foreigners met with limited supply, real estate agents said.

Analysis by Huttons Asia showed that one market segment in particular – private non-landed residential four-bedroom units – saw a 36.5 per cent jump in demand in the first quarter, compared with the fourth quarter of 2023.

Leasing demand in this segment was also 19.3 per cent higher year on year, the Huttons report released on May 2 showed.

The spike in demand for high-end four-bedroom units pushed rents for such properties up by 6.5 per cent in the first quarter to an average of $17,467 a month, from $16,396 during the fourth quarter of 2023, Huttons said.

The agency’s basket of luxury properties tracks residential units in the prime core central region (CCR) valued at $5 million and above, and with a strata area of at least 2,000 sq ft.

The rise in both transactions and rents for larger luxury units contrasts with trends in the wider market, where rents have been declining since the last quarter of 2023.

Overall private housing rents fell 1.9 per cent in the first quarter, based on the latest Urban Redevelopment Authority data released last week, extending the 2.1 per cent decline in the previous quarter.

“The stronger demand for four-bedroom units may be due to more high-net-worth foreigners relocating to Singapore because of geopolitical tensions,” said Mr Mark Yip, Huttons Asia’s chief executive.

“It is (also) probably due to the limited supply of such units,” he added.

Huttons estimated the rental volume for luxury homes in the first quarter of 2024 to be 569 units, 3.6 per cent higher than in the fourth quarter of 2023, but 2.6 per cent lower year on year.

Projects such as Seascape, The Orchard Residences and The Residences at W Singapore Sentosa Cove had greater rental demand in the first quarter, Mr Yip said.

Ms Linda Chern, CBRE’s head of residential services, said developments such as Boulevard 88, 15 Holland Hill and Leedon Green could also be experiencing more demand.

“These are brand-new projects, with bigger square footage and larger units,” she said.

Mr Eugene Lim, ERA Singapore’s key executive officer, observed that the private residential rental market is undergoing a divergence.

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The mass rental market is more adversely affected by economic uncertainty and a slew of new home completions. “In contrast, the luxury rental segment is performing well due to the shortage of larger units, which is expected to continue supporting rental price growth,” he explained.

He added that previously, some foreigners would have looked to buying homes instead of renting. But the April 2023 additional buyer’s stamp duty (ABSD) hike “continues to have a chokehold on foreign buyers, pushing them towards renting instead”.

Ms Wong Siew Ying, PropNex’s head of research and content, said rental demand for three- and four-bedroom units appears to be driven mainly by expatriates and co-living operators.

“The supply of larger units for rent on the market is also limited, given that three- and four-bedders tend to be purchased for owner occupation,” she said.

With fewer new launches in the CCR providing four-bedroom and larger units, ERA’s Mr Lim noted that supply will continue to be limited. “The high price quantum restricts the pool of potential buyers, deterring many developers from building larger units,” he said.

Sales up in high-end market

In its report on the luxury sector, Huttons suggested that sales in the high-end market were also improving.

The total sales value in the resale market was $282.9 million in the first quarter, 4.2 per cent higher than in the quarter before it. Transaction volume was estimated at 46 units for the first quarter, 34.3 per cent lower than in the fourth quarter.

But the higher volume in the previous quarter was due to sales at one new project, Watten House. Stripping out the effect of Watten House sales, Huttons put the total volume for the first quarter at 40 transactions, or 17.6 per cent higher quarter on quarter.

Huttons’ Mr Yip said the heightened geopolitical tensions appear to have convinced buyers to buy homes in safe haven Singapore.

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The price growth of properties in the CCR outpaced that of other regions in the first quarter. Prices in the CCR rose 3.4 per cent, more than the 0.3 per cent and 0.2 per cent gains in the rest of central region and outside central region, respectively.

Overall, private home prices rose 1.4 per cent in the first quarter, slower than the 2.8 per cent increase in the previous quarter.

CCR home sales “continue to be driven by the local market, particularly after the tightening of the ABSD measure in April 2023”, PropNex’s Ms Wong said.

Foreign buying has fallen to 3.5 per cent of overall non-landed private home transactions in the CCR in the first quarter of 2024 – easing from 5.8 per cent in the third quarter of 2023 and 5.6 per cent in the fourth quarter of 2023, she added.

“With the punitive 60 per cent ABSD rate in place on residential property purchases by foreigners, we expect foreign buying interest to remain relatively muted,” Ms Wong said.

Two new prime projects – Newport Residences and Skywaters Residences – are expected to be launched in the coming months.

The top-selling luxury non-landed projects in the first quarter were The Ritz-Carlton Residences, Hilltops, Ardmore Park, Watten House, Nassim Jade, The Laurels, The Ladyhill and Grange Residences, Huttons said.

At the peak of the luxury market, in the good class bungalow (GCB) segment, only five GCBs were transacted during the quarter, similar to the level in the fourth quarter of 2023.

Huttons data showed that the total value of GCBs sold in the first quarter was $118.4 million, or 10.6 per cent lower than in the previous quarter.

“Buyers were unwilling to pay a high premium for a GCB owing to the uncertain economic climate and higher-for-longer interest rates, resulting in a quiet first quarter,” Mr Yip said.

The largest GCB deal by quantum was in 15 Ford Avenue, which was sold for $39.5 million to a scion of Mr Wee Cho Yaw’s family.

Tenant resistance is keeping a lid on GCB rentals. Huttons said GCBs with asking rents that were below $30,000 were still preferred by tenants, as they “remain cautious and prefer not to pay high rents”. The top deal was in Tanglin Hill, which fetched a monthly rent of $120,000. THE BUSINESS TIMES

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Rents for luxury homes in Singapore jump in Q1 despite wider market slump: Huttons (2024)
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