Robust demand for residential rental market amid Covid-19

Singapore’s private residential rental market has been a beneficiary of the pandemic-induced work-fromhome (WFH) trend. 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 3Q2020 to 114.2 in 4Q2021. 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 takeup arising from a buoyant residential rental market.

Since the pandemic has upended travel and work trends, 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 expenditure incurred from home purchase, greater convenience from accommodation support services, opportunities to network and participate in meaningful activities as well as a greater sense of community.

As the authorities navigate towards an endemic situation, the gradual influx of 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 1H2022, as tenants maintain their rental accommodation amid the prevailing uncertainties of regular travel.

Knight Frank Research forecasts that rental growth of private residential property could hit around 7% y-o-y by 4Q2022.