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Private residential rents up 0.8% in 3Q2024, driven by double-digit vacancy rate in the CCR

/ EdgeProp Singapore |

October 25, 2024 8:57 PM SGT

The rebound of private home rents in 3Q2024 marks the first increase since rents rose by 0.8% in 3Q2023 (Photo: Samuel Isaac Chua/EdgeProp Singapore)

SINGAPORE (EDGEPROP) - Overall rents of private homes recovered in 3Q2024, up 0.8% q-o-q, according to URA on Oct 25. It follows two consecutive quarters of declines of 1.9% in 1Q2024 and 0.8% q-o-q in 2Q2024. The rebound marks the first increase since rents rose by 0.8% in 3Q2023.

For the first nine months of 2024, overall rents were down 1.9%, in stark contrast to the 11.1% increase over the same period in 2023. Christine Sun, chief researcher and strategist at OrangeTee Group attributes declining rents to the abundant supply of completed private homes in 2022 and 2023.

Rental increase was consistent across the various property types, led by landed properties, which recorded a moderate 3.2% q-o-q rise compared to the 0.9% q-o-q decrease in 2Q2024, says CBRE. Non-landed properties decreased by a smaller margin of 0.5% q-o-q following a 0.8% q-o-q fall in 2Q2024.

Among non-landed properties, the increase was supported by the Outside Central Region (OCR) and Rest of Central Region (RCR), which posted 2.2% and 1.7% q-o-q growth, respectively, in 3Q2024. Meanwhile, the Core Central Region (CCR) underperformed, falling by 1.6% q-o-q. Rental growth for the first nine months of 2024 for the CCR, RCR and OCR works out to -3.3%, -1.6% and -0.5%, respectively.

According to Tricia Song, CBRE head of research for Southeast Asia, 19,968 private homes (excluding executive condos or ECs) were completed in 2023. It was the largest supply of new completions since the 20,803 units in 2016. The bulk of completions (8,517 units) in 2023 were in 3Q2023. As a result of the bumper completions, vacancy spiked, resulting in rentals easing since 4Q2023, says Song.

In 3Q2024, 3,253 private residential units were completed -- including One Pearl Bank (774 units), Forett At Bukit Timah (633 units), One Holland Village Residences/Quincy House Singapore (551 units) and The Reef At King's Dock (429 units). It was 72.8% more than 2Q2024's 1,882 units, CBRE's Song points out. It brings the 9M2024 tally of new completions to 5,376 units. Another 3,727 units are expected in 4Q2024, bringing total completions for 2024 to 9,803 units.

"Despite the large number of new completions in 3Q2024, the stock of occupied private residential units (excluding ECs) decreased by 2,051 units in the quarter, compared with an increase of 4,162 units in the previous quarter," says Song.

As a result, the vacancy rate of completed private residential units (excluding ECs) increased to 7.2% as at end Q3 2024, she adds, from 6.1% in the previous quarter. "This could be a sign that the rental market conditions are still challenging," she cautions.

The vacancy rates of completed private residential properties in 3Q2024 were 11.2% in the CCR, 8.1% in the RCR and 4.9% in the OCR, compared with 9.3%, 5.8% and 4.9%, respectively, over the previous quarter.

Rents are, therefore, expected to continue easing in 4Q2024. However, they are unlikely to fall back to pre-2022 levels, reckons Song. It's because holding costs are higher with increased property taxes, higher purchase prices (requiring higher returns), higher mortgage payments owing to higher interest rates, and higher rental demand from the 15-month wait-out period for downgraders (those switching from private to resale HDB) under the September 2022 cooling measures.

Song, therefore, expects rents to ease by 3% in 2024, led by the CCR segment, which is weighed down by a double-digit vacancy rate.

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