Singapore’s rental market in 2025 is expected to face some challenges, especially as the adoption of AI in the white-collar work sector continues to grow. Savills’ recent report highlights several factors contributing to this outlook:
AI Impact on White-Collar Jobs: As AI increasingly takes over tasks traditionally performed by white-collar workers, particularly in the tech sector, there may be a reduction in the demand for expatriates or talent to be physically present in Singapore. While AI is anticipated to boost productivity, it could also lead to a decrease in the number of high-paying white-collar roles, thereby reducing the need for rental housing for expatriates.
Decline in New Home Completions: A key factor that could support the rental market is the significant drop in new private residential completions for 2025, which is expected to be around 5,850 units, down from 8,460 units in 2024. Fewer new units will help reduce the availability of rental properties, potentially putting upward pressure on rents, especially for existing units.
Higher Property Taxes and Psychological Resistance: With higher property taxes likely to increase landlords’ costs, many may be less inclined to accept lower offers on rents. Even though property tax increases might not be rationally linked to actual rent declines, the psychological impact of these higher taxes could discourage landlords from lowering rents significantly, which may help maintain rental rates at current levels.
Sticky Mortgage Payments: Mortgage payments are expected to remain at current levels due to higher interest rates, meaning that many property owners might hold firm on rental prices rather than reducing them. This could further prevent rents from dropping, as landlords strive to cover their higher costs.
In summary, while the rental market faces pressures from changes in the tech and white-collar workforce, the limited supply of new homes and economic factors such as higher taxes and sticky mortgage payments could act as a saving grace, helping to stabilize private residential rents in Singapore in 2025.
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