Despite a sluggish economy, the Singapore rental market grew 8.3% year-on-year (YoY) to 22,115 leasing transactions island-wide in the first quarter of 2019, according to the latest report from the Urban Redevelopment of Authority (URA). 

The report showed market revival was due to demand from both, expatriates returning to Singapore after the 2018 year-end festivals; and occupants displaced by collective sales developments -- where buildings are being torn down for redevelopment.

At a glance:

• Singapore economy sluggish
• Rental property demand on the rise
• Demand fuelled by expats and locals
• Average rents for high-end private residentials rises

Savills stated the percentage of leases for one-bedroom units has been trending up in the last two years. 

Although leases of two- and three-bedroom units continue to dominate the market, leases for one-bedroom flats accounted for 21.5% of total leasing transactions in Q1/2019. This trend is expected to continue in the future given the ample supply of one-bedroom units and shrinking housing allowances/budgets for expatriates.

"Unfavourable economic conditions are counterintuitively supporting rental indices as tenants fall back to renting smaller units which carry a higher S$ per square feet rent (PSF),” stated Alan Cheong, executive director, research and consultancy, Savills Research.

In a similar vein, average rents for the Savills basket of high-end, non-landed private residential projects increased 1.6% QoQ, during the January-to-March quarter.

At the end of Q1 2019, the overall vacancy rate of completed private residential units dipped to 6.3%, while island-wide vacant stock stood at 23,357 units.

Despite the current unfavourable macro-economic environment, the rental market for private residential properties is expected to hold firm, underpinned by low completion volumes until 2020, low vacancy levels and a shift towards smaller homes which carry a higher S$ PSF rent.

Source: Savills Research, Urban Redevelopment of Authority (URA). 

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