The slowdown in demand for high-end homes has exacerbated the already weak leasing market, said a Colliers International report.
In Q1 2015, the average monthly gross rent for luxury and super luxury apartments fell 2.2 percent quarter-on-quarter, following a 0.8 percent drop on quarter in Q4 2014.
The report noted that newly completed homes and unsold inventory competed with existing stock to vie for a limited pool of tenants who mainly comprise existing tenants searching for alternative accommodation. New expatriate arrivals also remained limited due to tight immigration policies.
Notably, more tenants are looking for bigger apartments at the same rent, leaving landlords hard pressed to revise rents downwards or accommodate home improvement requests to secure renewals, noted Colliers.
Meanwhile, the weak buying sentiment has also forced property developers to withhold launches and put up units for lease instead, adding to the growing supply of homes in the rental market.
As a result, average monthly gross rents of luxury and super-luxury apartments are expected to drop by around eight to 10 percent in 2015.
“With landlords getting the shorter end of the stick, a tenant’s market is likely to persist,” added the report.