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by dennisngwk

Rental Outlook 2022

New Launch

The rental market was resilient in both 2020 and 2021. Despite Covid hitting our shores in 2020, rental demand held up very well in both the landed and non-landed segments of the market.

In 2021, the estimated rental demand for non-landed homes is 90,000, about 7% higher than 2020 while that for landed homes is 6,000, similar to 2020. There has been more interest in District 1, 2 and 6 non-landed homes in 2021. The rental demand for the first ten months of 2021 is similar to the whole of 2020. The city centre has not hollowed out despite some corporate downsizing and hybrid work. It is still a major employment node and the convenience of proximity to work still wins hands down.

Beyond the existing tenant demand, new tenants are entering the rental market where the supply of newly completed homes is tight. It includes buyers of new homes whose completion is delayed due to Covid and single professionals working from home. There are also long-term visit pass holders who have stayed in Singapore since the outbreak of the pandemic.

Landed
Condominium Apartment

Rents for private homes are estimated to have rose by 10% to 12% in 2021 and that could be reflected in the revised annual values for private homes. Rents for GCBs are estimated to have jumped by more than 10% in 2021.

With the country cautiously setting up more VTLs and experiencing strong economic growth in 2021, companies will bring in more professionals to work in Singapore and further support the rental market in 2022. The construction industry will also pick up pace once more workers come in and the supply of new homes will increase in 2022. On balance, rental outlook for private homes in 2022 will see another increase of 5% to 8% in 2022.

The HDB rental market in 2021 is estimated to see an 8% increase from 2020. While there was an exodus as a result of some foreign workers returning to their home country, the market benefited from an estimated 100,000 Malaysians who stayed to work in Singapore and returning citizens from overseas. There were some HDB owners who cash out from their flats and upgrade to a private home.

The unexpected strong demand pushed up rents to levels unseen in recent years. A 3-room flat in Yishun was rented out at $2,200 per month, higher than the previous monthly contracted rent of $1,600. A 5-room and EA in Sembawang were rented out at $2,700 per month, up 35% from the previous monthly rent of $2,000. HDB flats in the northern part benefited from Malaysians who are stuck in Singapore. It is estimated that overall HDB rents have rose as high as 10% in 2021.

HDB

The opening of the VTL land link may not be good news for the rental market in the long run. An estimated 100,000 Malaysians are renting in Singapore and with travel gradually resuming, this demand pool will slowly reduce and exert a downward pressure on rents. Rents may see another 5% to 8% growth in 2022.

Credit: Huttons Research.