2021 was an exceptional year for Singapore’s private residential leasing market, with leasing transaction volume rising 6.6% y-o-y and rents strengthening 9.9% y-o-y, based on the Urban Redevelopment Authority’s (URA) rental index of private residential properties. It was the strongest increase in rents in eleven years since the index rose 17.9% y-o-y in 2010. Rents of private homes continued to surge in 1Q22, rising 4.2%, and this uptrend is expected for the rest of 2022.

While condominium and apartment rents are up by 11.7% y-o-y, as at 1Q22, some developments recorded exceptional hikes in rents. The top 20 increases in rents ranged from 22.3% to 36% during this period. The developments tabulated in Figure 1 below reveal some interesting observations:

• 55% of the top developments are in the suburban Outside Central Region (OCR), 25% in the Rest of Central Region (RCR) or city fringe and 20% in the prime Core Central Region (CCR), which suggests that the residential leasing market has established itself island-wide, beyond prime locations.
• Among the top ten risers, eight developments are less than 200-units in size, which could mean fewer units in the same development competing for tenants.
• Eight of the top ten risers are also near MRT stations, which is a significant factor in attracting tenants.
• Seven of the top ten risers are less than ten years old, suggesting that newer projects could be more attractive and in better condition.
• Among the top ten risers, seven had transacted median unit sizes ranging from 400 to 700 sq. ft, which could be indicative of stronger demand for more affordable smaller units.

These broad trends in the residential leasing market may be useful to landlords, tenants, investors and developers.

Figure 1: Top 20 risers in median rents of condominiums/apartments from 2Q21 to 1Q22

Source: URA Realis
*for rental transactions in 1Q22

A major contributor to the robust residential leasing market was a stronger than expected economic recovery in 2021, with GDP growing 7.6%, as Singapore transited into endemic (Covid-19) living. Employment conditions improved, border restrictions started to ease, and hirings picked up as more businesses recovered. Another contributory factor is more locals renting residential properties while awaiting the completion of their new homes, which have been delayed by the slowdown in the construction industry.

Another consequence of delays in construction is the lack of newly completed supply to meet rental demand in 2021, when the economy was picking up. Only 3,433 new private homes were completed in 2020 and 6,388 in 2021, which were way below the average annual new completion of 12,610 units for the last ten years. This contributed to the strong uptick in rents.

As at 1Q22, condominium and apartment rents rose most strongly by 13.1% y-o-y in the OCR submarket. It was followed by a 12.4% y-o-y increase in RCR, while CCR registered a 10.8% y-o-y rise. OCR also led in terms of volume of leasing transactions of condominiums and apartments between 2Q21 and 1Q22, accounting for 36.5% of the market share, while 32.7% and 30.8% were attributable to RCR and CCR, respectively.

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