Private home rentals for luxury homes increase in Q1 amid broader market slump: Huttons Asia

The rented of luxury homes increased during the first quarter of 2018, in contrast to an overall slump in the overall market as demand from high-net-worth foreigners met with limited supply in the premium segment, said agents.

The analysis of Huttons Asia showed that demand for private four-bedroom houses that are not landed rose by 36.5% in the first quarter of 2019 compared to the fourth quarter of 2023.

Huttons report, which was released on May 2 showed that the demand for leases in this sector is 193 percent higher than last year.

Huttons stated that the rise in demand for four-bedroom high-end units drove rents up 6.5 percent in Q1, up to an average of S$17.467 per month. It’s a far cry from S$16.396 in the fourth quarter of 2023.

The agency’s basket of luxury properties includes residential units in the prime Core Central Region (CCR) valued at $5 million and over, and having strata areas of at less than 2,000 square feet.

Market rents have slowed from the fourth quarter of 2023, despite the fact that transactions for luxury homes are rising. According to the latest Urban Redevelopment Authority figures released this week, the market rental rates fell by 1.9 percent in Q1 following the decrease of 2.1 percent during the previous quarter.

Mark Yip, chief executive officer of Huttons Asia, said that the increase in demand for four-bedroom apartments could be a result of a higher amount of wealthy foreigners who are moving to Singapore due to geopolitical tensions.

He added that the shortage of these units is likely to be the reason.

Huttons estimated the volume of rentals for luxurious homes in Q1 2024 to be 569 units. This is 3.6 per cent higher than Q4’s, however 2.6 per cent lower year over year.

Projects like Seascape, The Orchard Residences and The Residences at W Singapore Sentosa Cove have seen higher rental demand in Q1, said Yip.

CBRE’s head of residential services Linda Chern, said developments like Boulevard 88, 15 Holland Hill and Leedon Green could also be experiencing more demand.

She said, “These are brand new projects that feature larger square footage and bigger units.”

Eugene Lim is ERA Singapore’s chief executive director. He noticed that there was a difference between the private and public residential rentals.

The rental market for the mass market is more adversely affected by economic uncertainty and a slew of new home completions. The luxury segment, on the other hand, is doing well because of the lack of bigger units. This is expected to boost rental growth, he said.

He said that in the past, foreigners may have thought about buying an apartment rather than renting. The April 2023 Additional Purchase Stamp Duty (ABSD), however, “continues a chokehold foreign buyers and pushes them to rent instead”.

Demand for rentals in three- and four-bedroom units appears to be driven mainly by co-living operators and expatriates, according to Wong Siew Ying, PropNex’s director of content and research.

“The supply of larger units for rent on the market is also limited, given that beds of three and four tend to be purchased for owner occupation,” she said.

With fewer new launches in the CCR with four-bedroom and larger apartments, the ERA’s Lim noted that supply is expected to remain limited.

“The high price quantum restricts the pool of potential buyers, which discourages numerous developers from building bigger units,” he said.

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Sales are up in the high-end market

In its report on the luxury market, Huttons suggested that sales in the premium market were also improving.

The value of sales in the resale market was S$282.9 million in Q1. 4.2 percent more than the prior quarter. it. Transaction volume was estimated at 46 units for Q1, 34.3 per cent lower than in Q4.

The greater volume in the previous quarter is due to sale of a brand new project called Watten House. Huttons calculated that the Q1 total volume was 40 transactions or 17.6 percent higher than the previous quarter.

The heightened geopolitical tensions appear to have enticed homeowners to invest in houses in the safe haven of Singapore as per Huttons’ Yip.

The price growth of properties in the CCR beat that of other regions during the first quarter. The CCR saw a price increase of 3.4 percent more than gains of 0.3 and 0.2 percent in the Rest of Central Region or Outside Central Region.

In Q1, the median cost of a house was up 1.4 percent, as compared to the 2.8% increase recorded in the prior quarter.

PropNex’s Wong stated that CCR home sales are “continued to be driven by the local market” in particular after ABSD measures were tightened in April 2023.

Foreign purchases have dropped to 3.5 percent of total private home transactions that are not landed within the CCR in Q1 2024 – easing from 5.8 percent in Q3 2023 and 5.6 percent in Q4 2023, she said.

She said, “We expect the foreign buyer’s demand to remain modest with the current 60 percent ABSD rate for residential properties purchased by foreigners.”

Two new prime projects that are called Newport Residences and Skywaters Residences – are expected to go live in the next few months.

The top-selling luxury non-landed projects in Q1 included The Ritz-Carlton Residences, Hilltops, Ardmore Park, Watten House, Nassim Jade, The Laurels, The Ladyhill and Grange Residences according to Huttons.

In the quarter ending March 2023, the height of the luxury market within the Good Class Bungalow segment (GCB), only five GCBs were being sold.

Huttons information shows that the amount of GCBs in Q1 decreased by 10.6 percent, bringing it down to S$118.4 millions.

“Buyers were unwilling to shell out a large sum for an GCB owing to the uncertain economic outlook and the higher interest rates, resulting in a quiet first quarter,” said Yip.

The biggest GCB deal by quantum was in 15 Ford Avenue, which was sold for S$39.5 million to a descendant of Wee Cho Yaw’s family.

Tenant resistance has kept a check on GCB rentals. Huttons stated that GCBs with rents in the range of S$30,000 were still preferred by tenants as they “remain cautious and prefer not to pay rents that are excessive”. The best deal was found situated in Tanglin Hill, which fetched a monthly rent of S$120,000.


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