By Faris Mokhtar and Xiao Zibang
(Bloomberg) — When Canadian expat Michelle went to renew the lease on her three-story house in Singapore in May, her landlord wanted to raise the rent by almost 40%.
Michelle tried to negotiate but the owner wouldn’t budge on the S$10,000 a month asking price. She’s moving her family into a three-bedroom apartment next month.
“I took what I could get,” said Michelle, who asked not to use her full name on concern it may impact her business in the city-state. There’s “a lot of greed at the moment.”
Rents are skyrocketing in Singapore, particularly in the prime accommodation favoured by expatriate residents, as surging demand from locals and newer arrivals collides with pandemic-induced delays in supply. Rental prices for the private properties leased by expats are rising on average by 20% to 40%, according to 10 real estate agents interviewed by Bloomberg, though some landlords are even asking for double the previous rent.
The island’s expats command higher-than-average wages and will be far from the worst hit as the cost of living jumps. But the sharp increases make the city less competitive compared with other financial and business hubs in luring talent to the city.
“Singapore will be pricing itself out of being a place where expats can afford to live — it's already expensive but this will be the tipping point for a lot of people,” said Juliet Stannard, director and owner of Citiprop Property Management. “No one can afford a 50% rent increase. This is not sustainable.”
Ulisse Dell’Orto said his landlord wanted to double the rent when he tried to renew the lease on his one-bedroom apartment in central Singapore this year. Dell’Orto, the Asia-Pacific head of Chainalysis Inc., a blockchain analytics company, said he’s trying to negotiate.
In January, the asking price to rent a bungalow in a luxury residential area on Sentosa island shot up by S$11,000 in a day, starting at S$26,000 a month and closing at S$37,000, according to Navin Bafna, an agent at Singapore-based PropNex Realty.
People are snapping up rental properties without ever visiting them, basing their decisions solely on viewing videos, according to several agents. A French couple signed a lease on an apartment in April after seeing just four photos, according to Cheryl Wong, an agent at Singapore-based Finchley Realty.
Bafna said one of his clients refused to believe him when he was placed 19th on a waiting list to see a house in the East Coast area, not far from Changi Airport. “It’s not that we are giving them the wrong picture,” Bafna said. “We ourselves are as amazed as anyone. In my 11 years as an agent, I have never heard of” No. 19 on the waiting list, he said.
The red-hot market is giving rise to rental scams, where people posing as agents use fake online listings to lure deposits from unsuspecting home hunters. At least 547 people fell prey to the schemes this year through May, Singapore police said, with losses amounting to at least S$1.6 million.
Landlords are even rescinding offers after tenants pay security deposits, because they want higher prices, according to PropNex agent Anthea Yeo.
Singapore isn’t unique in seeing rising rents. They’re also surging in London and Dubai. In New York’s Manhattan, median asking prices jumped 36.9% in the first quarter from a year earlier, according to property portal StreetEasy.
But the Southeast Asian city-state had one of the biggest increases in the Asia-Pacific region in the fourth quarter of last year, the most recent data available, according to real estate firm Knight Frank.
It’s in sharp contrast with old rival Hong Kong, where rents are dropping amid an exodus of expats and locals. Residential rents fell in May to the lowest since March last year, according to a rental index compiled by Hong Kong real estate agent Centaline Property Agency Ltd.
Singapore has several reasons for the surge. One is that locals, who are often working from home some of the time, are moving into properties typically rented by expats as they seek bigger living spaces, and as they wait for construction to be completed on new homes, said Wong Xian Yang, head of research at real estate services firm Cushman & Wakefield Plc in Singapore.
There’s also strong demand from foreigners arriving in the city-state, which reopened its borders to fully vaccinated travelers in April. Part of that is people relocating from Hong Kong, although it’s hard to quantify how much, some of the agents said.
And supply continues to tighten due to construction delays caused by the pandemic. This year, about 7,000 to 8,000 new private apartments could be launched, according to two real estate analysts’ estimates. That’s lower than the average of 10,750 new units started annually between 2012 and 2021.
“When there’s no stock, it becomes a cowboy town,” PropNex’s Yeo said. People outbid the asking price, she said.
In one instance, a four-bedroom unit at Ardmore Park, within walking distance of the glitzy Orchard Road shopping belt, received 60 inquiries within 24 hours, according to Citiprop’s Stannard.
Cushman & Wakefield’s Wong says the situation is unlikely to ease until next year, when construction projects that were delayed are due to be completed.
The rising rents are part of a list of concerns for Singapore’s expats, which also include difficulties finding places for their kids in international schools, and rising prices for tuition due to inflation. Meanwhile, expat packages are getting smaller, and the government has tightened its criteria for worker visas as it seeks to ensure citizens get more higher-paying jobs. The number of expatriate white-collar workers fell to the lowest in more than a decade last year, according to the Ministry of Manpower, partly as a result of travel restrictions from the pandemic.
Soaring lease rates have prompted some renters to call for the government to reintroduce controls. The US, Canada, Germany and Spain have jurisdictions with some form of rules on rental increases.
In “countries like Germany, there’s regulation on rent increases,” said Chainalysis’s Dell’Orto, an Italian who’s been in Singapore for almost two years. “In Singapore’s case it’s not really regulated and that makes it challenging.”
Singapore abolished rent controls in 2001 after government housing programs had enabled most Singaporeans to own their own homes, the Ministry of National Development said. “Singapore Citizens form a small minority of the residential rental market and there are no compelling grounds to reintroduce rent controls” that “could result in the distortion of market forces,” the ministry said in a written response to questions.
About 90% of Singapore citizens own their homes and the government provides subsidies to many low-income families that can’t afford to buy, the ministry said.
Still, more than a third of Singapore’s 5.45 million population are expats, and about 650,000 of those are permanent residents or hold white-collar visas. With most leases in Singapore coming up for renewal every two years, the prospect of big rent hikes is looming for thousands of other foreign residents over the next few months.
Briton Lee Baker, who’s lived in Singapore for nine years, had already decided not to renew the lease on his four-story residence in the upscale Bukit Timah area. Given the uncertain economic outlook, he wanted something cheaper, he said. That was even before he heard his landlord’s offer: a 110% increase in rent.
“This is unprecedented in my years living here,” Baker said. “A landlord’s dream.”
©2022 Bloomberg L.P.