The Urban Redevelopment Authority’s (URA) latest private housing stats show that landed homes registered bigger increases in prices as well as rents, compared with non-landed private homes in the first quarter this year over the preceding quarter.

Some market watchers such as Savills Private Office executive director Jacqueline Wong, attributed this partly to the influx of ultra high net worth individuals (UHNWIs) aiming to set up family offices here. They pay a premium to either lease (initially, when they enter Singapore) or eventually buy (if they qualify to become Singapore citizens) spacious residences on the island, in keeping with their lifestyles.

Knight Frank Singapore’s research head Leonard Tay attributed the strong rise in URA’s price index for landed homes in Q1 to the relative scarcity of such residences in high-rise Singapore vis-a-vis growth in demand from Singaporeans who have become increasingly affluent as well as new citizens. “After the pandemic, those who can afford it are giving priority to bigger private indoor and outdoor living spaces, the type that landed homes can provide.” he added.

URA’s price index for landed properties increased 5.9 per cent quarter on quarter (qoq) in Q1 2023 (after rising 0.6 per cent qoq in the fourth quarter of 2022).

Prices of non-landed private homes rose 2.6 per cent qoq in the first quarter (after inching up 0.3 per cent in the previous quarter).

PropNex said that the price surge for landed homes is likely to have been supported by the 47.5 per cent qoq jump in the number of detached home sales in Q1 2023. It also highlighted the sale of three adjoining freehold bungalows in Chancery Hill Road and Dyson Road for S$61.1 million during the quarter.

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URA’s rental index for landed properties jumped 14.5 per cent in Q1 2023 (after climbing 6.3 per cent in the previous quarter). Rents for non-landed private homes rose 6.2 per cent in Q1 (a slower pace of increase compared with the 7.5 per cent rise in the previous quarter).

Wong of Savills noted that UHNWIs (including those setting up family offices) these days are not only from China, but also Taiwan, US, the Philippines, India and South Korea among other countries.

“They are used to living in large homes. They want at least five spacious bedrooms; they value their privacy and they also require a swimming pool, foyer and grounds (garden) for entertaining their friends and associates. There aren’t many penthouses here that fit the bill, so very often, the only option is to go for a large landed home, preferably in a Good Class Bungalow (GCB) Area. When these ultra-rich folks arrive here, typically they would not qualify to buy a landed home here. So in the interim they lease a GCB and are prepared to pay monthly rents of S$80,000 to S$200,000; these are not the typical C-suite types,” Wong explained.

It is not just GCBs that are benefitting from this trend but also large detached and semi-detached houses in District 10 locations such as Mount Sinai and Bukit Timah. Some of these properties are fetching monthly rents of S$20,000 to S$25,000, roughly double the S$12,000 to S$15,000 two or three ago, added Wong.

Prices of big landed houses have also moved up in tandem, Wong noted. “Typically, these UHNWIs settle here, contribute to Singapore’s economy and work towards getting citizenship. This would qualify them to buy large landed homes including GCBs.”

URA’s Q1 data shows that its overall private home price index (comprising both landed and non-landed properties) appreciated 3.3 per cent qoq. The increase is a tad higher than the 3.2 per cent qoq increase reflected in URA’s flash estimate for Q1 2023 released on Apr 3. In Q4 2022, the index had inched up 0.4 per cent qoq.

Year on year, the index is up 11.4 per cent.

The overall rental index for private residential properties increased by 7.2 per cent qoq in Q1, a marginal moderation from the 7.4 per cent increase in the previous quarter. URA’s rental index for Q1 2023 is up 33.4 per cent year on year.

Based on the expected completion dates reported by developers to URA, some 17,690 private homes are slated for completion this year, 85.7 per cent higher than the 9,526 units completed in 2022. This would also be the highest number of annual completions since 2016’s 20,803 units.

JLL’s head of residential research for Singapore Chia Siew Chuin said that the surge in completions this year, coupled with heightened economic uncertainties and growing tenant resistance to high rents, could alleviate upward pressure on rents.

Will doubling of ABSD rate for foreign buyers support leasing demand?

“However, there are some foreigners such as employment pass holders and others waiting for approval to become PRs (permanent residents) or Singapore citizens who were previously planning to buy a home here. They may have to continue living in rental accommodation at least for the short term, following the doubling in the Additional Buyer’s Stamp Duty (ABSD) rate for foreigners buying any residential properties here. This would continue to support leasing demand,” she added.

On the private home price front, Chia expects an increase of 3 per cent to 4 per cent for full-year 2023, barring adverse macroeconomic events and job losses. Last year, URA’s private home price index rose 8.6 per cent.

Buyers could adopt a wait-and-see approach, with anticipation that prices will fall on the back of increased negotiating power following the latest cooling measures. “However, immediate price corrections are unlikely as market fundamentals remain relatively stable with tight supply and resilient underlying demand for private homes, particularly from local households,” she added.

As developers had incurred increased land acquisition and overall development costs, they are likely to hold topline prices for upcoming launches relatively firm, particularly for mass-market projects as the impact of the ABSD increases on buying demand for this segment is expected to be limited. “However, to entice some of those who are waiting on the sidelines, developers may offer incentives such as furnishing vouchers,” noted Chia.