Condominiums in the Orchard area (Picture: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Rents for private non-landed properties in prime District 9, which covers the Orchard Road and River Valley areas, were the highest in November, according to research by Savills Singapore. Citing a monthly rental guide published by Livethere, Savills’ digital residential marketing arm, the consultant says that the median rental price for a three-bedroom apartment in District 9, which is in the Core Central Region (CCR), clocked in at $15,000 per month in November — the highest among all districts.
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District 1, which covers the Boat Quay, Marina and Raffles Place areas, ranked second, with a median rental price of $12,400 per month for a three-bedroom apartment. District 10, which covers Tanglin, Holland and Bukit Timah, came in third at $9,750 per month.
According to Savills, rents for high-end non-landed residential projects continued their upward trajectory in 3Q2022, increasing 3.1% q-o-q. The growth was supported by demand from more high-net-worth foreigners entering Singapore, a lack of significant completions, and a limited stock of larger homes in the prime areas.
Given the rise in interest rates and other economic headwinds, The consultant notes that landlords are pushing rents upward to meet mortgage payments. Correspondingly, many tenants in the CCR are looking to move and are considering cheaper alternatives in the Rest of Central Region (RCR) or the Outside Central Region (OCR).
This may be contributing to escalating rents in the RCR and OCR. In District 4, which covers HarbourFront and Telok Belangah, the median monthly rental price for a three-bedder stood at $11,100 in November, compared to $7,350 last year. In the OCR, submarkets such as District 5, which covers Clementi and West Coast, have seen the median monthly rent increase to $6,400 as of November, compared to $4,950 a year ago.
Alan Cheong, executive director of research and consultancy at Savills Singapore, believes that rents will “remain tight” until 2023 when incoming supply totalling 18,234 residential units alleviates pressure in the rental market. “It may take another 18 months before the market starts to cool down or correct. This is when the stock of delayed completions caused by the 2020 and 2021 pandemic-induced disruptions get cleared up,” he adds.
With the sharp increase in rents, Cheong expects that properties purchased for investment will see higher yields. To that extent, he anticipates property buyers to continue seeking units to purchase for investment, even in the face of rising interest rates. “An increase of 2-3% in interest rates would not have as much impact on buying demand compared to a decade ago,” he remarks.
He also expects sustained demand from foreign buyers, given Singapore’s “safe haven” status. He also notes that some foreigners have children attending school in Singapore. “These plus points are usually strong enough for them to overlook the 30% Additional Buyers Stamp Duty (ABSD),” he adds.
Given the relatively low level of new sales supply, Cheong also opines that buyers are also likely to accept the higher prices of private residential properties set at each new launch.
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