Huttons Asia: Luxury rental homes rise in Q1 despite market decline
Huttons Asia’s analysis revealed that the demand for private, non-landed four-bedroom homes was up 36.5 percent 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 leasing in this sector is 193 percent more than the same time last year.
Huttons said that the increase in the demand for four-bedroom luxury apartments drove rents up 6.5 percent in the first quarter of 2018, up to an average of S$17.467 per month. This compares to S$16.396 in the fourth quarter of 2023.
The luxury property basket is an assortment of homes situated within the Core Central Region, valued at more than S$5 million and with an area of strata that is a minimum of 2,000 square feet.
Rents in the market have been falling from the end of the fourth quarter in 2023, even though transactions for luxury properties are growing. According to the most recent Urban Redevelopment Authority figures released this week, the market rental rates fell by 1.9 percent in the first quarter of 2019, following the decrease of 2.1 percent during the previous quarter.
Mark Yip, chief executive director of Huttons Asia He said the increased demand for apartments with four bedrooms could be a result of a higher amount of wealthy foreigners who are moving to Singapore due to geopolitical tensions.
He also said that the lack of these units was likely to be the cause.
Huttons estimate that the volume of rental for luxurious homes will be 569 units by the end of Q1 2024. This is 3.6 percent more than Q4 and 2.6 percent lower than the previous year.
According to Yip, the rental demand for projects like Seascape Residences, The Orchard Residences or The Residences of W Singapore Sentosa Cove was more than in the first quarter of this year.
Linda Chern of CBRE, the director of residential services for CBRE said that new developments such as Boulevard 88 and 15 Holland Hill and Leedon Green, could also be experiencing an increase in demand.
She added, “These are brand new projects that have more square footage and larger units.”
Eugene Lim is ERA Singapore’s chief executive director. He noticed that there was a gap between the private and public residential rental properties.
Mass rental is the most negatively affected by economic uncertainty and the increase in new construction homes. The premium segment, on the contrary, is performing well due to the absence of bigger units. This will increase rental prices according to the economist.
He added 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 forces people to lease instead”.
Wong Siew Ying is PropNex’s director of research and content. He stated that the demand for rental homes with three or four bedrooms is mostly driven by expatriates.
She also said that the availability of bigger rental units is also restricted because the majority of threeand four bedders are bought by owners.
The ERA’s Lim stated that the availability of larger four-bedroom homes is likely to be limited.
The price hikes limit the number of buyers, and deter developers from constructing larger units.
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Sales rise in the premium market
Huttons report on luxury products suggested that sales of luxury goods were also growing.
The total value of sales in the resale industry was S$282.9million which is which is a 4.2 percent rise over the prior quarter. The expected volume of transactions for the first quarter was 46 units that is 34.3 percent lower than the fourth quarter.
The greater volume in the prior quarter was due to sale of a brand new project known as Watten House. Huttons estimated that the total volume for Q1 was 40 transactions, or 17.6 percent more than the prior quarter.
Huttons Yip stated that the growing geopolitical tensions are causing buyers to buy houses in Singapore as a refuge from the rigors of war.
In the first quarter of 2018 in the first quarter of 2018, the CCR was the most expensive region to experience a price hike over other regions. The CCR had a price rise of 3.4 percent more than the increases in the range of 0.3 and 0.2 percent in the Rest of Central Region or Outside Central Region.
In Q1, the median cost of a home for private use increased by 1.4 percent, as compared to the 2.8 percent increase in the prior quarter.
PropNex’s Wong stated that CCR home sales are “continued to be influenced primarily by local markets” especially after the ABSD measures were tightened in April 2023.
She noted that foreign purchases decreased to 3.5 percent of all private homes that are not landed transactions during CCR Q1 2024, a decrease from 5.8 percent in Q3 2023 and 5.6 percent in Q4 2023.
She also said, “We expect the foreign buyer’s interest to remain minimal with the 60% ABSD rate for residential properties bought by foreign buyers.”
In the coming months, two major projects are scheduled to be launched in the coming months – Newport Residences Residences as well as Skywaters Residences.
Huttons said that the most popular luxury non-landed residential developments included The Ritz-Carlton Residences. Ardmore Park was a close second and was then Watten House. Nassim Jade was third. The Laurels and The Ladyhill completed the list.
In the fourth quarter of 2023, which was the peak of the luxury market within the Good Class Bungalow segment (GCB) there were only five GCBs were sold.
Huttons data show that the amount of GCBs in the first quarter decreased by 10.6 percent, or S$118.4 millions.
Yip stated that buyers were hesitant to pay the higher cost for a GCB because of the uncertain economic outlook, as well as interest rates that were higher for a longer period of. This led to an unsettling first quarter.
The most significant GCB deal by value was the 15 Ford Avenue. It was transferred to a scion of Wee Cho Yaw’s family for S$39.5million.
Tenant resistance helps keep GCB rents under control. Huttons said that tenants prefer GCBs that have asking rents less than S$30,000 because they “remain cautious and don’t want to pay excessive rents”. The most affordable deal for tenants in Tanglin Hill was a S$120,000 monthly rental.