Rents for luxury homes have soared amid demand from high-net-worth individuals, who are willing to pay top dollar for these homes, analysts said.
Singapore’s red-hot property market saw rents rising to record highs last year. But signs pointed to a slowing down, with condominium rents up 6.2 percent in the first quarter – down from 7.5 percent in the October to December period and 8.3 percent in July to September.
But landed property rents have continued surging, with a 14.5 percent hike in the first quarter. This came after several quarters of increases, adding up to a year-on-year jump of 39.3 percent.
A National University of Singapore (NUS) professor attributed the sharp rise to two factors – the low supply of luxury homes and strong demand from high net worth individuals.
As land is scarce, Singapore has a “very limited” supply of such homes, said Professor Qian Wenlan, director of NUS’ Institute of Real Estate and Urban Studies.
The number of landed properties under construction peaked in the fourth quarter of 2012, according to data from the Urban Redevelopment Authority (URA). Since then, the figure has fallen significantly.
As of the first quarter, Singapore has about 73,000 landed homes – less than 19 per cent of total private housing stock.
“Therefore, the amount of landed houses provided for rent to the market is inelastic. Whether the rent increases basically depends on the demand of high-end tenants in the market,” Prof Qian said.
The rise of family offices in the last two years is also pushing up demand in the high-end rental market, said Professor Sing Tien Foo, provost’s chair professor at NUS’ Department of Real Estate.
These foreigners are not eligible to buy landed houses, but they can afford to pay high rents, he said. Besides family offices, they could include other investors and senior management of foreign MNCs relocating to Singapore.
Between the third quarter of 2020 and the first quarter of this year, median per square foot (psf) rents for detached houses rose 120 per cent – from S$1.70 to S$3.75 psf per month.
This means that the median rent for a GCB with a land area of 15,070 sq ft – the minimum size to be classified as one – would have more than doubled from S$25,619 to S$56,512.50 in less than three years.
