4 reasons why Singapore’s residential leasing volume bounced back in H1 2021
Total private leasing transactions increased 13.9% to 47,515 during the period.
After two quarters of decline, Singapore’s private residential leasing volume finally recovered as it inched up 1.1% QoQ to 23,893 transactions in Q2/2021, according to Savills. This translates to a 13.9% HoH increase to 47,515 in the first half of 2021.
Savills outlines four main reasons for this rebound. Firstly, existing tenants were forced to extend their leases while waiting for their new homes to be completed as construction delays persisted. Secondly, the outflow of overseas nationals has been slower than new arrivals.
“A third reason is that Singaporeans who were forced by the outbreak of SARS-CoV-2 to return home had to rent because they either did not have a home or their existing one has an ongoing lease still running. Lastly, there has been a noticeable increase in demand for small unit accommodation by Singaporeans. These are mainly the millennials who, because of the need to Work-From-Home (WFH), have decided to move out of their parents’ home for the benefit of having a quieter working environment,” the analyst says.
Here’s more from Savills:
Following two consecutive quarters of decline, leasing demand for non-landed and landed properties increased by 1.0% and 4.0% QoQ respectively. While non-landed rental transactions in Rest of Central Region (RCR) continued to fall (-2.0% QoQ) to a record low since a year ago, Core Central Region (CCR) and OCR started to see an uptick of 2.4% and 2.5% QoQ respectively.
The top five non-landed projects with the highest number of leasing transactions in Q2/2021 were mainly located in the OCR. Also, more than half of the rental transactions were for smaller unit types (one- and two-bedroom units), mainly in developments such as The Sail @ Marina Bay and eCO. For these small unit types in the Central Business District, it could be because there is still a significant pool of expats and a working population who enjoy the proximity to their offices located in the area. This is supporting leasing demand for such units as The Sail @ Marina Bay. On the other hand, there were more people moving to OCR for higher rental savings. As such, eCO at Bedok, which because of its suburban location, has the lowest median rent among the top five projects in terms of lease transactions.
Following two consecutive quarters of rental growth, private home rents continued to trend up in Q2. The URA rental index for all private residential properties recorded a strong 2.9% QoQ increase. The non-landed private residential properties remained as the main driver for overall rental growth, rising by a higher rate of 3.1% QoQ in Q2.
The rents for non-landed homes went up across the market segments, with OCR leading, rising 3.6% QoQ. This is likely to be driven by healthy leasing by tenants who relocated from CCR to save on rent. The non-landed private residential rents in CCR and RCR also rose at a faster pace of 3.1% and 2.8% QoQ respectively.
Similarly, monthly rents for high-end non-landed private residential projects tracked by Savills recorded their second quarter of growth, up by 0.9% QoQ to S$4.14 psf in Q2/2021. While rents for some of the high-end non-landed private residential developments started to weaken on the back of tightened budgets and slower takeup rates, some of the highly sought-after projects are still commanding a rental premium.