Despite Singapore’s private residential property prices rising 3.33% year-on-year in Q1 2025, the rental market presents a contrasting financial landscape where tenants may find relative value amid conditions that challenge property investors.
Singapore’s rental market offers tenants relative value even as property prices climb, creating headwinds for investors seeking strong returns.
The island-wide private rental index grew 2.4% year-on-year in Q3 2025, while average gross rental yields declined to 3.29% from 3.40% in late 2024, creating a market environment where property ownership returns remain compressed. These yields appear particularly modest when compared to the United States average of 6.68%, and non-resident investors face an additional 24% tax on rental income that further diminishes net returns.
The private residential rental price index rose 1.2% in the first half of 2025, reversing a 2.7% decline from the prior year, yet this recovery remains measured rather than robust. The Rental Index for private properties reported a 4.0% YoY decline in Q3 2024, illustrating the volatility that preceded the current stabilization period. Q2 2025 saw a 0.8% rise in rental prices, following a 0.4% increase in Q1, indicating overall market stability.
Rental growth forecasts from major consultancies indicate continued stability rather than significant escalation. CBRE initially projected island-wide rents to grow 1-3% in 2025 due to low supply completions but subsequently downgraded expectations to flat growth after first-half declines from increased completions. Cushman & Wakefield anticipates rents stabilizing with mild growth supported by steady economic conditions, while Savills predicts flat rents throughout 2025 attributed to dampened foreign demand and artificial intelligence effects on labor markets.
The median monthly rent for partially furnished private apartments stood at S$4,200 in late 2025, with average rents ranging from USD 2,558 for one-bedroom units to USD 4,651 for three-bedroom apartments.
Demand patterns reveal continued rental activity across multiple segments, with Normanton Park recording 290 leasing transactions in the first half of 2025 due to its city-fringe positioning. HDB rentals increased to 19,728 transactions in the same period from 18,952 the prior year, reflecting broader market participation.
Professionals in media, technology, and biomedical sectors continue driving rental demand, with proximity to transport infrastructure and lifestyle connectivity supporting stability. Newly completed apartments command rent premiums that partially offset lower overall demand. Meanwhile, cautious expatriate tenants reassess budgets amid economic headwinds.
Rents have edged lower to flat over the past three to six months as inventory increased, contributing to market equilibrium that favors tenant flexibility over ownership commitments in current conditions. While some investors pursue properties with BCA Green Mark certification that command 3-5% higher premiums, renters benefit from increased supply and stable pricing without shouldering ownership costs.
