Singapore—Residential rental rates surged in 2019, reaching the highest they have ever been, according to a report from Bloomberg.
Moreover, the report says rent could even go higher by as much as three to five percent this year, despite the economic fallout from the coronavirus spread that has affected all the continents around the world except for Antarctica.
What has driven rental rates up in Singapore is the continued influx of expatriates who have made the country their home. Singapore has continued to be attractive to many professionals from other countries.
Many of the flats in Singapore are rented by expatriates, which works out to be less costly for them, considering the heavy stamp duties foreigners are obliged to pay when purchasing property.
The Bloomberg report quotes OrangeTee & Tie Pte, a real estate agency, as saying that rents rose by 1.4 percent in 2019, based on data gathered from the Urban Redevelopment Authority.
The head of research and consultancy at OrangeTee & Tie, Christine Sun, said that there were 93,920 signed leases in 2019, the highest figure in 10 years.
According to Ms Sun, “Some expats could be here for short-term work assignments, therefore leasing will be a more logical and flexible choice.”
And while renting is the more sensible option for many expatriates, most of the country’s citizens opt to purchase property due to high rental prices.
Foreign professionals have continued to view Singapore as a viable option for livability, since renting a flat is less costly when compared to Hong Kong, where renting is the most expensive and also compared to New York, which is in the top three most expensive cities. According to a 2019 ranking from a Deutsche Bank report, Singapore is in eleventh place, one spot higher than before.
Singapore’s high standard of education, low crime rate, political stability, excellent infrastructure and green spaces also contribute to make it attractive to foreigners.
And while the economic effect from the Covid-19 outbreak is expected to be considerable, industry experts say rental rates could still climb higher in 2020.
The report quotes the executive director of research at Savills Plc., Alan Cheong, as saying, “The strong influx of overseas workers in the new economy and companies seeking to de-risk from single country concentration should spur rents in 2020.”
In June of last year, the Government announced it would be reducing the supply of private residential housing from confirmed sites under the government land sales (GLS) programme for the latter half of the year.
Read related: 24,000 empty apartments around Singapore as government reports oversupply
Back then, it was reported that there were 24,000 private housing units that were empty. Additionally there were 44,000 private housing units in the pipeline, made up of 39,000 unsold units from GLS plus another 5,000 units from sites pending planning approval.
The Ministry of National Development (MND) made an announcement on June 6, 2019, that five confirmed list sites and eight reserve list sites yielding around 6,430 private homes, 92,000 sq m gross floor area (GFA) of commercial space and 1,100 hotel rooms had been released.
While the first half of the year’s GLS programme had 2,025 units of private homes from confirmed list sites, for the second half there were only 1,715 units, which is a reduction of 15 percent.
Since property market cooling measures were introduced in July 2018, demand has continuously lessened. Similarly, transaction volume has also gone down for the third straight quarter and developers’ demand for land has also moderated.
The announcement from the MND said, “Given these factors, the Government has decided to reduce the supply of private residential units on the Confirmed List for the GLS Programme. Together with the supply in the pipeline, the supply for the 2H2019 GLS Programme will sufficiently cater to the housing needs of our population. The Government will continue to monitor the property market closely and adjust the supply for future GLS Programmes, as necessary.” —/TISG
Read also: Number of homeowners in Singapore defaulting on mortgages on the rise
24,000 empty apartments around Singapore as government reports over supply