The Marq sets record S$100,000 per month rental in defiance of softening in broader m

The Marq sets record S$100,000 per month rental in defiance of softening in broader market

Mar 13, 2023

RENTALS for luxury properties continued to move upwards in recent months, with new record highs signed in both the landed and non-landed prime segments.

The outlier deals, propped up by demand from foreign high-net-worth individuals, come in contrast to a wider market that is slowing down in other segments, in both volume and value of transactions.

At The Marq on Paterson Hill, a four-bedroom apartment of 6,300-6,400 square feet (sq ft) in size was leased at S$100,000 a month starting from October 2022, according to data from the Urban Redevelopment Authority as at Mar 10.

The October deal topped an S$80,000 a month lease for a 15,100 sq ft unit at Eden in Draycott Park signed in February 2022.

The S$100,000 rental signed at The Marq in October is a 25 per cent jump from an S$80,000 lease contracted in July for another four-bedroom unit at the same development. In April, a similar-sized unit was let for S$60,000 a month.

List Sotheby’s International Realty’s (List SIR) senior associate vice-president Steve Tay attributed the rise in rentals at The Marq to its unique feature of single level floor plates of 6,000 sq ft with each unit having its own private pool, a rare find even among luxury condominiums. “The Marq will command a premium, and if there is not much supply, I do see rentals … going up even more than S$100,000,” Tay said.

The landed market too saw a handful of outsized deals. Most recently, in January 2023, a bungalow on Astrid Hill with a floor area of 14,700-14,800 sq ft achieved a monthly rent of S$170,000, according to latest URA data.

This compares to the previous registered high of S$150,000 for a bungalow at Dalvey Estate with a floor area of 22,500 sq ft to 22,600 sq ft, leased in April 2022. In December, a Fourth Avenue house of about 26,000 sq ft was also leased for S$150,000.

In June 2022, a Good Class Bungalow at Queen Astrid Park was reportedly leased for S$200,000 a month.

Savills Singapore’s executive director Jacqueline Wong pointed to the likely profile of tenants behind these record-breaking rentals to be high-net-worth foreigners from Asia who are setting up family offices in Singapore and renting a unit while waiting for their permanent resident or citizen status.

The tenants of these properties are not the typical expatriates who are renting under a corporate lease, she said.

The typical rental budget of a C-suite expatriate would be between S$20,000 and S$40,000, but it does not reach six figures, Wong added.

Rising rentals to continue

List SIR’s Tay believes that 2023 will be a record year for rental markets, with demand continuing to be strong as China reopens its borders and more foreigners, especially from North Asia, decide to set up base in Singapore.

This is because the Republic has established its reputation as a safe and stable country to both operate a business and live in, he explained.

However, Tay noted that although rental for luxury properties will increase, it will be at a slower rate.

“There is less supply in the market now, and landlords’ expectations on rent are also moving upwards, but there may be a point where the tenant may not feel it is justifiable to pay the expected rent of the landlord, and this is where the pace slows,” he said.

Tay added that he is currently handling four to five Good Class Bungalow leases where owners are asking for a monthly rental of between S$150,000 and S$200,000, but potential tenants are unwilling to match that rate.

Savills noted that a surge in the high-end rental market may occur this year, driven by foreign buyers waiting for their permanent residency or citizenship status.

These buyers may be motivated to rent to avoid the 30 per cent additional buyer’s stamp duty levied on foreigners, the firm added.

Savills expects rentals for luxury apartments to rise by 10 per cent to 15 per cent in 2023, compared to 5-10 per cent growth for the mid-tier and mass market segments. Monthly rents for luxury non-landed projects in 2022 grew 35.9 per cent from the previous year, outpacing the overall market which was up 29.7 per cent, Savills said in a report on Friday (Mar 10).

Savills reported that monthly rents for high-end non-landed private residential projects that the firm tracked continued rising for an eighth consecutive quarter, increasing 5.8 per cent quarter on quarter to S$5.83 per square foot per month in Q4 of 2022. This was the highest since Q2 of 2008, when average rent peaked at S$6.01 psf per month.

Chief executive of Savills Singapore Marcus Loo said: “While some rent adjustments may be expected in the second half 2023 due to the completion of more mass market projects, these changes are not going to have any impact on the luxury segment.”

For the whole of 2022, leasing volume of private residential properties totalled 90,261 transactions, 8.5 per cent less than in 2021, Savills noted, while overall rents continued to move up but at a slower pace each quarter.

Relief for tenants is expected to come only from the second half of 2023, “when the slowing economy and the fallout in the tech sector start to work their way through the demand side of the rental market”, Savills said in its report. The 18,000 new private residential units expected to complete this year should also help reduce rental pressure, but the correction is expected to be mild.

Demand is still evident in the market, especially for newly completed projects. In Q4, the project with the highest number of leasing transactions was Parc Esta in Sims Avenue, where 280 leases were signed with the median rate at S$7.43 psf per month. This compares to The Sail @ Marina Bay’s 144 deals at S$6.76 psf per month, and older Marina One Residences with 121 leases signed at a median S$7.21 psf per month, according to Savills data.