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Luxury home rentals jump in Q1 amid wider slump

Luxury home rentals jump in Q1 amid wider slump

Agents reported that, in contrast to the general market decline, rents for large luxurious homes have risen in the first-quarter, as the demand of foreigners with high net worth has met the limited supply in this segment.

An analysis showed that a particular market segment – non-landed private residential four-bedroom apartments – experienced a 36.5% increase in demand in the quarter following the fourth quarter of the year 2023.

This segment’s leasing demand also increased 19.3 percent year-on-year, according to the report released by the Federal Reserve on Thursday (May 2).

Rents of high-end, four-bedroom properties increased by 6.5 percent in the first quarter, to S$17.467, up from S$16.396 in Q4 2019.

The agency’s basket for luxury properties tracks residential apartments in the Core Central Region valued at S$5million and above with strata areas of at minimum 2,000square feet.

Rents on the general market have been falling since the end of the 2023 quarter. According to data from the Urban Redevelopment Authority released last Friday, overall market rentals fell by 1.9 % in Q1. This follows a 2.1 % decline in the preceding quarter.

A greater number of high-net worth foreigners may have relocated to Singapore due to geopolitical conflicts.

There is a limited supply of these units.

Huttons predicted that in the first quarter of 2024 there would be 569 luxury homes available for rent, 3.6% more than in the previous quarter but 2.6% less than last year.

Rents for Seascape, The Orchard Residences & The Residences At W Singapore Sentosa Cove were higher in Q1.

There could be a greater demand for development such as Boulevard 88 15, Holland Hill and Leedon Green.

These are brand-new developments with larger square footage, bigger units.

The mass-rental market is most adversely impacted by economic insecurity and the rapid completion of new homes. The luxury rental segment performs well due to a shortage of large units.

Some foreigners could have purchased homes instead of renting. Foreign buyers are still being pushed towards renting because of the Additional Buyer’s Stamp Duty hike in April 2023.

Rental demand is driven mainly expatriates.

A limited number of large units are available to rent in the market, mainly because three- or four-bedroom homes tend to be bought by their owners.

There will continue to be a limited supply as there are fewer new launches that offer four-bedrooms and larger units.

High price limits the pool of possible buyers, preventing many developers to build larger units.

In its report about the luxury market, it indicated that sales were also improving in the high end market.

The resale value was S$282.9 millions in Q1, which is 4.2 per cent more than the previous quarter. In Q1, transaction volume was estimated to be 46 units, 34.3 per cent less than in Q4.

Watten House sales were responsible for the volume increase in the first quarter. When Watten House is removed, the total Q1 volume at 40 transactions is 17.6 percent higher quarter-on quarter.

Tembusu Grand

Singapore’s safe haven status has been a major factor in attracting buyers.

CCR property prices grew faster than those in other regions during Q1. The CCR’s prices rose by 3.4%, while the rest of the Central Region and Outside Central Region saw gains of only 0.3% and 0.24%, respectively.

Overall, the price of private homes rose 1.4 percent in Q1, which was slower than the increase of 2.8 percent in the prior quarter.

CCR continues to be driven by local demand, especially following the ABSD in April of 2023.

Foreign buyers accounted for 3.5 percent of total non-landed residential home transactions in CCR Q1 2020, down from 5.8 percent in Q3 2012 and 5.6percent in Q4 2012.

Foreign buyers will likely remain very apathetic due to the penalty of 60 per cent ABSD for residential property purchased by foreigners.

During Q4 of 2023, there were only five GCBs sold at the peak luxury market.

Data revealed that the total amount of GCBs bought in Q1 fell by 10.6 percent compared to the previous quarter.

The first quarter of 2018 was relatively quiet due to buyers’ unwillingness to pay a higher premium for a GCB.

Read also: Kent Ridge Hill Residences

The largest GCB sale by volume was in 15 Ford Avenue. A scion of Wee’s Cho Yaw family bought it for S$39.5 millions.

Tenant resistance has kept GCB rentals in check. GCBs whose rents were less than S$30,000 still had a preference from tenants. They are cautious and don’t want to pay a high rent. Tanglin Hill ranked as the best deal in Singapore, where a S$120,000 monthly rent was negotiated.

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