Demand for Singapore rental property is surging amid supply shortage and expat arrivals
Demand for Singapore rental property is surging amid supply shortage and expat arrivals. The rental market in the world’s major cities is becoming increasingly competitive. Demand for private rented housing is increasing as pandemic-related restrictions are lifted and urban centers become more appealing.
Knight Frank released its latest Prime Global Rental Index last month, which tracks the movement of luxury residential rents in ten major cities. The fastest growth rates in the first quarter of this year were in New York and London, where rents increased by 38.5 percent and 26.4 percent, respectively, year on year. However, much of this expansion compensated for steep declines during the pandemic’s acute phase, with New York experiencing a 20% drop from peak to trough. Singapore, on the other hand, had the lowest peak-to-trough decline of the index’s four fastest-growing cities, at 3.4 percent.
This only adds to the country’s rental market’s impressive performance. According to ERA Singapore data, private rental values – both luxury and mass market – increased at an annual rate of 12.1 percent in the first quarter, the first double-digit increase since 2011. Many residents in London and New York relocated to the suburbs and coastal cities in search of more space. Singaporeans, 80% of whom live in government-built flats, the majority of whom are owner-occupiers, had “nowhere else to run to,” according to Nicholas Mak, head of research and consultancy at ERA Singapore. Furthermore, while many expatriates – who account for two-thirds of renters, according to online real estate portal PropertyGuru – returned home, a sizable proportion remained. Others were enticed back by the government’s historic decision to reopen the economy and treat the virus as endemic last year.
In the last two years, leasing activity in Singapore has been remarkably frantic for a rental market in a small island state with a population of only 5.5 million. It is being driven by a slew of pandemic-related domestic and external factors that have resulted in dramatic shifts in supply and demand. The sharp decrease in property supply has been one of the most significant. The combination of a sudden shortage of construction workers from India, Bangladesh, and other countries, as well as severe disruptions in the building material supply chain, has resulted in significant project delays.
The scale of the increase in rents is most evident in the luxury segment of the market favoured by expats. According to Bloomberg data, average rental prices per square foot for properties with two to four bedrooms in some of the most desirable districts have increased by 20 to 40% year on year. While there are various expat-led demand drivers at the top end of Singapore’s rental market, one of the more noticeable this year has been the relocation of an increasing number of Hong Kong-based foreign workers. These residents have had enough of the city’s harsh quarantine policies and see Singapore’s policy of “living with the virus” as a major draw.
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