Condo rents fall 1.3% y-o-y in Q1, Chinatown and Tanjong Pagar see steepest declines

Singapore's overall non-landed private residential leasing market continued to slow, with rents dipping 1.3% year-on-year in the first quarter of this year. Condominiums in Chinatown and Tanjong Pagar posted the sharpest rental declines.

According to the latest research report, the Q1 decline in non-landed private residential rents stands in stark contrast to the 4.8% growth recorded in the same period last year. On a quarter-on-quarter basis, rents fell 1.8%, widening from the 1.5% drop in the preceding quarter.

Larger units registered the most pronounced declines, with rents for three-bedroom units falling 2.6% quarter-on-quarter overall.

Three-bedroom units in Chinatown and Tanjong Pagar saw the steepest drop in median rents, sliding 12.3%. This was followed by condos in Buona Vista, West Coast, and Clementi, which fell 8.6%, while rents in the Alexandra and Commonwealth areas slipped 6.1%.

Areas where rents held up best included Boat Quay, Marina Bay, Raffles Place, Orchard, and River Valley.

Among the most popular one- to three-bedroom configurations, the Rest of Central Region (RCR), representing mid-tier private homes, posted the largest quarter-on-quarter decline in median rents at 3.5%.

Rents in the Outside Central Region (OCR), which represents mass-market private homes, and the Core Central Region (CCR), representing prime luxury homes, fell by 1.8% and 1.4% quarter-on-quarter respectively.

The overall decline in rents has remained gradual and steady, likely because landlords are in no hurry to accept lowball offers from tenants. This may reflect a lagged response from some landlords who were slow to adjust rents upwards when rental supply shrank rapidly in 2022.

Having locked in new leases in 2022, these landlords were unable to raise rents in tandem with market trends the following year, and are now seeking to recover their missed opportunity costs.

The report added that an estimated 9,600 new private residential units are slated for completion this year. As this supply is significantly lower than the 19,376 units completed in 2023, it could lend support to the rental market and alleviate downward pressure on rents.