When Michelle, a Canadian expat in Singapore, sought to renew the lease on her three-story home in May, her landlord proposed a nearly 40 percent rent increase.
Michelle attempted to haggle, but the owner would not budge from the $7,200 per month asking price of S$10,000. Next month, she will move her family into a three-bedroom apartment.
“I accepted what I could get,” said Michelle, who requested that her full name not be used out of worry that it may negatively affect her company in the city-state. There is “a great deal of greed now.”
In Singapore, rents are soaring, especially in the premium housing preferred by expatriates, as rising demand from locals and expats collides with pandemic-caused supply shortages. According to ten real estate brokers questioned by Bloomberg, rental costs for private residences leased by expats are increasing by an average of 20 to 40 percent, with some landlords requesting twice the prior rent.
Rise in Inflow of Expats into Singapore
Expats on the island earn above-average incomes and will not be the worst hurt by the rising cost of living. But the high rises make the city less competitive in attracting talent compared to other financial and economic centres.
“This will be the tipping point for a lot of individuals,” said Juliet Stannard, director and owner of Citiprop Property Management. “No one can afford a rent rise of 50 percent. This cannot continue.”
This year, when Ulisse Dell’Orto attempted to extend the lease on his one-bedroom flat in downtown Singapore, his landlord wanted to quadruple the rate. The Asia-Pacific head of blockchain analytics business Chainalysis Inc., Dell’Orto, said that he is attempting to negotiate.
According to Navin Bafna, an agent with Singapore-based PropNex Realty Pte, the asking rent for a bungalow in a premium residential neighborhood on Sentosa island increased by S$11,000 in a single day, from S$26,000 a month to S$37,000.
Most Expats Rent House without Viewing
Several real estate brokers report that people are acquiring rental houses without ever seeing them, relying exclusively on videos to make their selections. According to Cheryl Wong, an agent with Finchley Realty in Singapore, a French couple accepted a lease for an apartment in April after seeing just four photographs.
One of Bafna’s customers did not trust him when he told him he was 19th on a waiting list to visit a home on the East Coast region, close to Changi Airport. Bafna said, “We are not giving them the incorrect impression.” “We are as shocked as everybody else. In his eleven years as an agent, he had never heard of the number 19 on the waiting list.
People acting as real estate brokers are using bogus internet rental ads to defraud unwary house seekers of their deposits. As of May, at least 547 victims and losses totaling at least S$1.6 million have fallen victim to the scams, according to Singapore police.
According to Anthea Yeo, landlords are rescinding offers even after renters pay security deposits because they demand greater pricing.
Rise in Rental Across The Globe
Rising rents are not unique to Singapore. Additionally, they are rising in London and Dubai. According to the real estate website StreetEasy, the median asking price in Manhattan, New York, increased by 36.9 percent in the first quarter compared to the same period a year before.
Knight Frank, a real estate company, reports that the Southeast Asian city-state saw one of the largest price hikes in the Asia-Pacific area during the fourth quarter of 2017.
It stands in stark contrast to Hong Kong, where rents are falling due to an exodus of expatriates and locals. According to a rental index developed by Hong Kong real estate brokerage Centaline Property Agency Ltd., residential rentals declined in May to their lowest level since March of last year.
Singapore’s growth has several causes. Wong Xian Yang, head of research at Cushman & Wakefield Plc in Singapore, said that locals, who often work from home at least part of the time, are moving into houses normally leased by foreigners as they want larger living spaces and await completion of building on new homes.
More Influx of Foreigners
Foreign visitors to the city-state, which reopened its borders to fully vaccinated tourists in April, are also in high demand. Some of the agents said that a portion of this is due to individuals migrating from Hong Kong, however it is difficult to determine how much.
In addition, building delays brought on by the epidemic continue to stifle supplies. According to the estimations of two real estate consultants, between 7,000 and 8,000 new private flats might be introduced in 2018. This is less than the yearly average of 10,750 new units constructed between 2012 and 2021.
“When there is no inventory, it becomes a cowboy town,” said Yeo of PropNex. She said that someone outbid the asking price.
According to Citiprop’s Stannard, a four-bedroom property in Ardmore Park, within walking distance of the exclusive Orchard Road retail district, had sixty requests within twenty-four hours.
Wong of Cushman & Wakefield predicts that the situation will not improve until the completion of postponed building projects the following year.
Woes of Expats – Rising Cost and Rising Rent yet with Shrinking Pay Package
In addition to increasing rents, expatriates in Singapore are concerned about difficulty enrolling their children in foreign schools and inflation-driven increases in tuition costs. In the meanwhile, expat packages are shrinking, and the government has tightened the conditions for worker visas in an effort to increase the number of higher-paying positions for natives. According to the Ministry of Manpower, the number of expatriate white-collar employees dropped to its lowest level in more than a decade due in part to travel limitations imposed by the epidemic.
These Are the 20 Most Expensive Cities in the World for Expats.
Some tenants have demanded that the government restore regulations due to the rising cost of rent. The United States, Canada, Germany, and Spain all have regulations governing rent hikes.
In “countries such as Germany, rent rises are regulated,” said Chainalysis’s Dell’Orto, an Italian who has lived in Singapore for over a year. In the case of Singapore, the lack of regulation makes it tough.
The Singapore Central Bank maintains its policy as the city-state resumes growth.
According to the Ministry of National Development, Singapore repealed rent restrictions in 2001 after government housing initiatives allowed the majority of Singaporeans to buy their own houses. The ministry said in a written answer to an inquiry, “Singapore Citizens represent a tiny minority of the residential renting market, and there are no compelling reasons to impose rent restrictions,” which “may distort market dynamics.”
According to the ministry, almost 90 percent of Singaporeans own their houses and the government gives subsidies to many low-income families who cannot afford to purchase.
Still, more than a third of Singapore’s 5.45 million population consists of foreigners, with around 650,000 of them being permanent residents or holders of white-collar visas. As the majority of leases in Singapore are up for renewal every two years, tens of thousands of additional foreign residents face the threat of significant rent increases in the coming months.
Lee Baker, a Briton who has lived in Singapore for nine years, had already chosen not to renew the lease on his four-story home in the affluent Bukit Timah neighborhood. Given the uncertain economic situation, he said that he desired a cheaper option. This was even before he heard the landlord’s proposal: a 110 percent rent hike.
“I’ve never seen anything like this in my years living here,” Baker remarked. A landlord’s fantasy.