Leasing volume for non-landed residential properties jumps 24.4% in Q3, driven by relocations and rent adjustments

SINGAPORE: According to the latest Singapore Business Review report, leasing activity for non-landed residential properties surged by 24.4% quarter-on-quarter (QoQ) in Q3, reaching 25,731 transactions, according to property advisor Savills.

This spike was attributed to the back-to-school season, corporate relocations, lease expiries, and renewals.

The Rest of the Central Region (RCR) saw the largest growth at 25.2%, followed by the Core Central Region (CCR) at 23.5%, and the Outside Central Region (OCR) at 21.2%.

What fuelled the rise in leasing volume?

The rise in leasing volume was largely propelled by tenants upgrading to more attractive rental options, driven by lower rents and the influx of new supply.

This marks the first QoQ increase in leasing for non-landed private homes island-wide, reflecting a 0.5% growth, largely due to a shift from public housing to entry-level condominiums.

Notably, tenants are increasingly opting for one- to two-bedroom units instead of sharing larger spaces, following a steady decline in rents over the last four quarters.

The top three projects leading leasing transactions were Stirling Residences, The Sail @ Marina Bay, and Marina One Residences.

However, the CCR continued its downward trend, reporting a 1.6% QoQ rental decline, marking its fifth consecutive quarterly drop. High-end non-landed properties also saw a slight dip of 0.9% QoQ in Q3.

In the Savills report, it is anticipated that rents may reach a floor by the end of this year. Although additional supply continues to enter the market and tenants face ongoing budget pressures, the lower rent levels are expected to drive a shift of tenants from the public flat market and single-room lettings to whole apartment leasing. For 2024, they maintained a forecast of 5% year-on-year (YoY) decline in rents.

Alan Cheong of Savills Research said, “As rents have come off significantly, demand is returning, possibly leading to a stabilization of rents by the end of 2024….For 2025, we expect rents to stay sideways as businesses face headwinds and thus continue to watch their labour costs.”