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CONDO RENTAL MARKET SHIFTS: LANDLORDS HIT BY HIGH SUPPLY OF NEWLY COMPLETED
UNITS


The kitchen and living room of a two-bedroom unit at the Treasure at Tampines
condominium. ST PHOTO: CHONG JUN LIANG
Joyce Lim
Senior Correspondent
Updated
Mar 04, 2024, 05:00 AM
Published
Mar 04, 2024, 05:00 AM
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https://str.sg/f8nT


SINGAPORE – When Mr Shawn Lau collected the keys to his two-bedroom Treasure at
Tampines condominium unit in December 2023, he was anticipating a swift rental
process in a market that seemed to promise lucrative returns.

However, what followed was a stark reality check. Landlords like Mr Lau have
been left grappling with prolonged vacancies.

The once-hot rental market, characterised by high demand and good returns, has
been softening as newly completed units flood the market, real estate agents
told The Straits Times.



Deals used to close within a day, but no longer, observed Mr Alex Low of PropNex
Realty.

The surge in demand for rental units in the past three years was partly driven
by pandemic-induced delays in the construction sector. The influx of foreign
talent, international students and an increasing number of Singaporeans seeking
their own living spaces also heightened this trend.

But rentals in the last three months of 2023 fell for the first time in three
years, Urban Redevelopment Authority data showed.




PropNex real estate agent Jasmine Lau (no relation to Mr Shawn Lau) said: “Since
the second half of 2023, we have noticed many expats returning home and
Singaporeans transitioning to their Build-To-Order flats. These factors have
contributed to the high supply of condos available for rent.”

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Mr Luqman Hakim, chief data and analytics officer at property search portal
99.co, has noticed a higher supply of condo rental units and lower rental prices
since the middle of 2023.

He attributed this to landlords being under more pressure to quickly rent out
their units to service their mortgages when interest rates unexpectedly rose to
around 3.8 per cent in 2023, as well as more units obtaining temporary
occupation permits.

Home loan rates in Singapore shot up from around 1.15 per cent in the fourth
quarter of 2021 to over 4 per cent in November 2022.



In January 2024, the number of condominiums listed for rent on 99.co increased
threefold from a year earlier, and 9.4 per cent month on month, he said.

Ms Christine Sun, chief researcher and strategist at property firm OrangeTee
Group, said: “Our agents have observed that the unemployment rate seems to have
increased, leading to more expats breaking leases and returning to their home
countries.”

In 2023, a total of 82,257 private residential properties islandwide were rented
out, 8.9 per cent less than the 90,291 transactions concluded in 2022. This was
the lowest leasing volume in seven years, since 2016, noted Savills Research.

Close to 20,000 new private residential units (excluding executive condominiums)
were completed in 2023, more than double the figure for 2022 and the highest
since 2016.

Some of the mega developments completed in 2023 include Treasure at Tampines,
which has 2,203 units. Others, like The Florence Residences, Riverfront
Residences, and Affinity at Serangoon, had more than 1,000 units each.

With the influx of newly completed units hitting the market, property agents are
urging landlords to lower their rent or face prolonged vacancies amid the
changing landscape.

More On This Topic
Condo, HDB rents dip in January; leasing volumes climb
Is ‘cheaper’ rent on the cards soon in Singapore?

During the property boom till mid-2023, landlords saw a surge of 20 per cent to
30 per cent in rent and many are hesitant to accept lower rent now, said Ms Lau.
“Landlords need to see that the market has shifted in favour of tenants. Tenants
are now spoilt for choice,” she noted.

Ms Sun said: “The increase in housing supply has caused more landlords to be
willing to negotiate and accept lower rents in recent weeks.”

Analysts expect rentals to moderate further as another 18,500 units will be
completed between 2024 and 2025. Savills Research has forecast that private
residential rental prices will drop by 5 per cent year on year in 2024.

Mr Alan Cheong, executive director of research and consultancy at Savills
Singapore, said landlords with leases due can still expect a rental uplift as
current rents surpass those signed two years ago. But landlords seeking rental
increases beyond market rates may see fewer inquiries and extended vacancies.

Landlords faced with higher mortgage rates and increased property taxes for 2024
may seek to offset these costs by passing them on to tenants, potentially
resulting in prolonged vacancies if they do not accept lower offers, Mr Cheong
added.

Mr Lau, who paid close to $900,000 for his 614 sq ft Treasure at Tampines unit
in January 2020, is holding out for a tenant to meet his asking rental price of
$3,800 a month, given that the unit is on a high floor and faces the pool, but
it has been quiet so far.

Meanwhile, the 39-year-old businessman, who lives with his family in a Housing
Board flat, has also listed his condo unit for sale at $1.25 million. He has
taken heart from the increase in the number of viewings, and said he believes
the trend of rising property prices in Singapore will continue.

A fellow property owner at the same development, who wanted to be known only as
Ms Koh, said she struggled to find a long-term tenant for her 463 sq ft
one-bedder unit for about two months. She finally accepted a short-term lease of
three months when the tenant agreed to her monthly rent of $3,000.

Amid the challenging rental environment, the 46-year-old Singaporean, who works
and lives in Malaysia, said she is open to selling her property if she receives
a good offer or continuing to lease it if a long-term tenant can be secured.

“When I bought the unit, it was cheap and the price was something I could
afford. Now that interest has gone up, I don’t want to hold on to the property.
If I can find a buyer, I will sell it to reduce my debt and invest my money in
other ways,” she said.

More On This Topic
Riding on co-living trend, condo owners add more rooms to their units to earn
more rent
Fewer HDB upgraders buying private homes suggests more are priced out

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