Private home rentals for luxury homes rise in Q1 despite a wider market slump: Huttons Asia

The rented of luxury homes increased during the first quarter of 2018 which was in stark contrast to an overall slump across the entire market because the demand of foreigners with high net worth was met by a shortage of homes in the luxury segment, said agents.

Huttons Asia’s analysis revealed that the demand for private, non-landed four-bedroom residential units increased by 36.5% in the first quarter of 2019 compared to the fourth quarter of 2023.

Leasing demand in this segment was also 19.3 per cent higher year on year, the Huttons report that was released on Thursday (May 2) showed.

The spike in demand for high-end four-bedroom units pushed rents for such properties up 6.5 percent in the first quarter to an average of S$17,467 a month, up from S$16.396 in the fourth quarter of 2023, Huttons said.

The agency’s basket of luxury properties includes residences in the Core Central Region (CCR) valued at S$5 million and above, with an area of strata that is at minimum 2,000 square feet.

The rise in rents and transactions for luxury homes is in stark contrast to trends in the wider market which has seen rents declining since the last quarter of 2023. Overall market rents fell 1.9 percent in Q1 according to the most recent Urban Redevelopment Authority data released this week, which surpassed the 2.1 percent drop in the last quarter.

“The more demand for homes with four bedrooms could be due to more high-net-worth foreigners moving to Singapore because of geopolitical tensions,” said Huttons Asia’s chief executive officer, Mark Yip.

He said the insufficiency of these units was likely to be the reason.

Huttons estimated the volume of rentals for luxurious homes in the first quarter of 2024 to be 569 units. This is 3.6 per cent higher than Q4’s but 2.6 per cent less year-over-year.

Projects like Seascape, The Orchard Residences and The Residences at W Singapore Sentosa Cove had greater rental demand in Q1, Yip.

Linda Chern of CBRE, the director of residential services for CBRE said that new developments such as Boulevard 88 and 15 Holland Hill, as well as Leedon Green, could also see an increase in demand.

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

Eugene Lim is ERA Singapore’s chief executive officer. He noted that there was a difference between the private and public residential rental properties.

Mass rental is the one that is the most affected by the economic uncertainties as well as the increasing demand for new houses. The premium segment, on the other hand, is performing well because of the lack of larger units. This will support rental price growth according to the economist.

He said that in the past certain foreigners might have thought of buying homes rather than renting. However, the April 2023 Additional Buyer’s Stamp Duty (ABSD) hike “continues to have a chokehold over foreign buyers, pushing them to rent instead”.

Wong Siew Ying is PropNex’s head of research and content. He stated that the demand for rental homes with three or four bedrooms appears to be driven primarily by expatriates.

She said that the supply of larger rental units is also in short supply because the majority of threeand four bedders are bought by owners.

With fewer launches coming into the CCR providing four-bedroom and larger apartments, the ERA’s Lim said that the supply of units will continue to be limited.

He claimed that the prices are too high to accommodate the majority of buyers and discourage many developers from building bigger units.

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Sales increase in the high-end market

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

The total value of sales in the resale sector was S$282.9million, an increase of 4.2 percentage increase over the previous quarter. The volume of transactions estimated in Q1 was 46 units, which is 34.3 percent lower than the Q4 period.

The higher volume in the previous quarter was due to sales from one new development, Watten House. Stripping out the effect of Watten House sales, Huttons put the total volume for Q1 at 40 transactions, or 17.6 percent higher quarter on quarter.

Huttons Yip claimed that the growing geopolitical tensions have led buyers to purchase homes in Singapore as a secure haven.

In Q1 The CCR was the most expensive region to experience a price increase over other regions. The prices in the CCR were up 3.4 percent, which is more than the 0.3 percent and 0.2 percent gains within the Rest of Central Region and Outside Central Region, respectively.

In the first quarter of 2018, the average cost of a house was up 1.4 percent, compared to the 2.8 percent rise recorded in the previous quarter.

CCR home sales “continue to be driven by the local market, particularly after the tightening of the ABSD measure in April 2023”, said PropNex’s Wong.

She noted that foreign purchases dropped to 3.5 percent of all private homes that are not landed transactions during CCR Q1 2024, down from 5.8 percent in Q3 2023 and 5.6 percent in Q4 2023.

She said, “We expect the foreign buyer interest to remain relatively low with the 60% ABSD rate for residential properties bought by foreign buyers.”

In the next few months, two prime projects are expected to go live In the next few months, two new prime projects are expected to be launched namely Newport Residences Residences and Skywaters Residences.

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

In the fourth quarter of 2023, which was the height of the market for luxury in the Good Class Bungalow segment (GCB) there were only five GCBs had been transacted.

Huttons data show that the amount of GCBs during the quarter fell by 10.6 percent, bringing it down to S$118.4 millions.

Yip said that buyers were reluctant to pay the higher cost for a GCB due to an uncertain economic outlook, as well as interest rates which have been higher for longer. This resulted in the first quarter being quieter than usual.

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

Tenant resistance helps keep GCB rental rates in check. Huttons said GCBs with asking rents that were below S$30,000 were still preferred by tenants, as they “remain in a cautious state and are not willing to pay rents that are excessive”. The most expensive deal was located in Tanglin Hill, which fetched a monthly rent of S$120,000.


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