_Robust Demand For Residential Rental Market Amid COVID-19

The COVID-19 pandemic has impacted global supply chains, constrained the supply of labour and building materials into Singapore, and fluctuated border controls in various countries.

These challenges have hampered construction progress of residential projects, which will remain so at least for the next three months as the omicron variant cast uncertainty on the timing of the Covid-19 relaxation measures. The construction and handover delays of new homes to homebuyers and rising competition for available homes in the resale market have resulted in a robust private residential rental market (see Exhibits 1 & 2).

Singapore’s private residential rental market has been a beneficiary of the pandemic-induced work-from-home phenomenon. Residential leasing transaction volumes grew from 94,205 in 2020 to 99,925 in 2021, an increase of 6.1% and surpassing the pre-pandemic leasing volume in 2019 by 4.6%. Meanwhile, the residential rental index grew 10% over five quarters, increasing from a pandemic-low of 103.8 in 3Q 2020 to 114.2 in 4Q 2021. For the whole of 2021, rentals of all private residential properties and non-landed properties rose by 9.9% for both markets. Consequently, the co-living market segment witnessed stronger take-up arising from a buoyant residential rental market.

Since the pandemic has upended travel and workstyles, co-living dwellers are becoming more diverse — from local and foreign communities to family and older demographics. Occupants are embracing the extended benefits of co-living compared to conventional home rental or ownership. These include lower capital outlay without expenditures incurred from home purchase, greater convenience from accommodation support services, opportunities to network, participate in meaningful activities and a greater sense of community.

As the authorities work towards pivoting the pandemic towards an endemic situation, the gradual influx of the foreign workforce comprising professionals and expatriates from growth sectors – technology, biotech and healthcare – will have an effect on the residential rental market.

Coupled with construction delays exacerbated by Covid-19 and the muted pace of roll-out of completed homes, the supply of residential units available for lease could be constrained. Rental rate increases are likely to persist in first half of 2022, as tenants maintain to rent amid the prevailing uncertainties of regular travel.

Knight Frank Research forecasts that rental growth of private residential property could hit around 7% year-on-year by Q4 2022.