Singapore luxury home rentals surge amid high net worth individual demand

Demand from high net worth individuals has driven a surge in luxury home rentals in Singapore, with landed property rents experiencing a significant 14.5% increase in the first quarter. This comes after several consecutive quarters of growth, resulting in a year-on-year jump of 39.3%. Analysts have attributed the sharp rise to a low supply of luxury homes and strong demand from wealthy individuals.

Professor Qian Wenlan, director of the National University of Singapore’s (NUS) Institute of Real Estate and Urban Studies, explained that due to land scarcity, Singapore has a “very limited” supply of luxury homes. As of the first quarter, there are approximately 73,000 landed homes in the country, which account for less than 19% of the total private housing stock. Prof Qian said…

“The amount of landed houses provided for rent to the market is inelastic. Whether the rent increases depends on the demand of high-end tenants in the market.”

The rise of family offices in the past two years has also contributed to increased demand in the high-end rental market, according to Professor Sing Tien Foo, provost’s chair professor at NUS’ Department of Real Estate. These foreign-based family offices are not eligible to purchase landed houses, but they can afford to pay high rents, as can other investors and senior management of foreign multinational corporations relocating to Singapore.

Tricia Song, CBRE’s head of research for Southeast Asia, said that rents have spiked across all three landed property types – detached, semi-detached, and terrace houses – since bottoming out in 2020 amid the pandemic. The most significant increase was for detached houses, particularly in prime districts 9, 10, 11, and 21, where Good Class Bungalows (GCB) is located. Tricia said…

“Ultra-high net worth individuals and families setting up offices or businesses in Singapore have the ability and willingness to pay top rents for GCBs or prime bungalows in these locations.”

She also noted that landed homes are primarily owner-occupied, allowing landlords to command higher rents due to the limited supply of homes available for rent. In contrast to the 51,703 new non-landed private residential units expected to be ready by 2027, only 887 new landed houses will be built during the same period.

“While rents for condos are likely to stabilise … rents for landed may have room to go up further.”

Tricia added that landed rents are expected to stabilise later this year due to a weaker economic outlook and growing resistance to high rents.