Shorter residential leases are the new norm in policy-battered Singapore

Tenants are taking advantage of low rents.

Two-year condo leases are getting out of vogue in Singapore, where private residential rents have been on a steady downtrend for the past several quarters.

According to ERA Realty, more tenants are opting for 12-month leases to take advantage of the continued drop in rents.

This trend has led to an increase in the number of rental transactions. Data from SRX Property show that private non-landed residential rental transactions jumped 6.4% year-on-year to 3,093 units in December.

“The year-on-year increase is likely to be due to more lease renewals rather than new demand as more tenants commit to shorter leases to capitalise on the falling rents environment,” ERA Realty said.

ERA Realty expects that rents will drop further in 2016, after booking a 5.4% decline in 2015 and a 5.2% contraction in 2014.

“In 2016, rents are expected to continue being under pressure from tight immigration policies and high supply. This will be most keenly felt in the OCR, where the bulk of the completions are located. All in all, 2016 will probably see a decline of 5% to 8% in rentals,” ERA Realty noted.