Luxury home rents rise in Q1 amid wider market decline

Agents report that rentals for large luxury properties jumped in first quarter despite an overall decline in the market. This is due to increased demand from high net-worth foreigners and limited availability in the high end segment.

One market segment, private non landed residential four bedroom units, saw a 36.5% jump in demand compared to fourth quarter 2023.

The report released on May 2 showed that leasing demand was 19.3 percent higher in this segment compared to last year.

Rents rose by 6.5 percent in Q1 for luxury four-bedroom apartments, compared to S$16.396 a month during Q4 2020.

The basket of Luxury Properties tracks residential properties in the Core Central Region of Singapore (CCR), with a value of S$5 million or above, and a strata space of at least 2,000 sq. feet.

Rents have declined in the market since the last quarter in 2023. According to the most recent Urban Redevelopment Authority data, released last Thursday, the overall market rental rate fell by 1.9% in Q1. The decline from 2.1% the previous quarter was a continuation.

This could be because more high-networth foreigners have moved to Singapore as a result of the geopolitical unrest.

The fact that there are so few of these units also plays a role.

Huttons has estimated that the number of units rented for luxury homes would be at 569 in Q1 2020, 3.6% higher in comparison to Q4 and 2.6% lower than year on year.

The rental demand for Seascape Residences in W Singapore Sentosa Cove, The Orchard Residences as well as The Residences on The Orchard Residences was higher during Q1.

Demand may increase in areas such as Boulevard 88 (15 Holland Hill), Leedon Green and Boulevard 88.

These are all new developments, which have bigger square footages and larger units.

Mass rental markets are more negatively affected by economic uncertainties and an influx of completed new homes. The luxury rental market is performing better than the mass rental market due to a lack of larger homes, which are expected to continue to support rental price increases.

Some foreigners were more inclined to buy homes than rent. The additional Buyer’s Stamp Duty increase of April 2023 is continuing to squeeze foreign buyers. They are being forced into renting.

Rental demand for four- and three-bedroom units seems to be driven mostly by co-living operators and expatriates.

The Continuum

It is rare to find larger rental units, since most of the time these are bought for personal use.

As fewer units are launched in the CCR that have four bedrooms and larger, supply will remain limited.

This high price restricts the pool and potential buyers of developers, which discourages them from building large units.

It suggested that high-end sales are also improving.

The resale sales volume was estimated at 46 units for Q1, 34.3 per cent lower than in Q4. The Q1 transaction volume is estimated at 46 units. That’s 34.3% less than the Q4 figure.

Watten House is the reason for the larger volume of sales in the prior quarter. Watten House sales are not included in the Q1 total. The volume of transactions for the quarter is still 40, or 17.6% higher quarter over quarter.

Singapore appears to be a safe place for home buyers, as the geopolitical tensions have increased.

CCR properties’ price increases in Q1 were higher than in other areas. Prices in CCR rose 3.4%, higher than 0.3% in Rest of Central Region & Outside Central Region.

Overall, home prices in Q1 rose only 1.4 % compared to 2.8 % in the last quarter.

CCR sales are still driven by the local markets, especially since the ABSD was tightened up in April.

Foreign purchasing has dropped to 3.5 % of the total non-landed private house transactions in CCR during Q1-2024. It was 5.8 % in Q3-2023 and 5.6 % in Q4-2023.

Due to the steep ABSD of 60% on foreign residential property, foreign interest is expected to remain low.

During the peak period of the luxury sector, only 5 GCBs have been sold during the quarter. This is the same as the Q4 level for 2023.

Data shows the total value sold of GCBs was S$118.4million in Q1, or 10.6percent lower than that of the previous three-month period.

Buyers did not pay a high price for a GCB due to the uncertainty of the economic climate. They also refused to pay a high rate because interest rates were higher and would continue to be higher.

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The largest GCB by quantum deal was 15 Ford Avenue. That property was sold at S$39.5 to a scion Weecho Yaw’s.

Tenant resistance holds GCBs back. Tenants prefer GCBs whose rental asking prices are less than S$30,000 because they’re cautious and want to avoid paying high rents. Tanglin Hill’s top deal was for a S$120,000 rent per month.

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