3 things that will drive Singapore leasing demand this year
There is increasing demand from WFH locals who want their own confined space.
Before May, the Covid-19 situation appeared to have stabilised, but since then, a surge in community cases has occurred. This prompted the government to retract from Phase 3 to impose a tighter Phase 2 (Heightened Alert) measure for the period 16th May to 13th June 2021.
According to Savills, as working-from-home (WFH) becomes the default at workplaces once again and more companies are adopting hybrid work arrangements going forward, this may spur more people to rent accommodation, particularly for those who prefer having their own space particularly as more members are confined in the same household.
This observation was obtained from agent feedback where they noticed over the past nine months an increase in leasing demand from locals, especially professional singles trying to reduce interference from other family members while they WFH.
Apart from this, arising from this Phase 2 (Heightened Alert) in Singapore, Savills says the government has also suspended entry for long-term pass holders and short-term visitors with a recent travel history to countries such as India, Bangladesh, Nepal, Pakistan and Sri Lanka. This is expected to take a further toll on the construction industry, which is already facing a manpower crunch resulting in delays to the construction of HDB flats and private residential properties.
“As the construction delays continue, there is likely to be increasing leasing demand from those who are waiting for their homes to be completed. Separately, as home prices continue to escalate, some potential homebuyers may be priced out of the market and may choose to rent first while waiting for prices to stabilise,” notes Savills.
Despite a recent surge in Covid-19 cases worldwide, including Singapore, the active roll out of vaccination programmes and stricter measures locally is expected to bring down the curve in the coming months. Savills says the containment and stabilisation of the programme will likely drive more investment and hiring to Singapore once international borders reopen, resulting in more demand in the rental market.
“As such, for 2021, we maintain our forecast for non-landed private residential rents with an upper band of +2% and a lower band of -1%.”