Will the rental market continue to favour landlords?
Rents in Singapore’s rental market have jumped significantly since the start of 2022 and show little sign of slowing. Since then, market watchers had predicted that rental prices would climb – and their predictions have since come to pass, with landlords having the upper hand in recent quarters. This has been a source of major frustration the tenants in the city-state, and many of them have taken to social media to share their experiences with near-doubling rents in certain parts of the country, especially the Core Central Region (CCR).
The most recent Real As State video put out by EdgeProp Singapore covers this situation in detail. According to Alan Cheong, executive director of research and consultancy at Savills Singapore, rents will likely continue to climb through the first half of the year, before moderating off in the second.
Historical evidence suggests that the current trend of rising rents may be worse than in past situations. The URA data from 2022 shows that the non-landed private residential rental index has increased by an impressive 30%. However, this pales in comparison to the around 40% jump that occurred in 2007 when the Marina Bay Sands site was awarded.
Cheong explains that the current rental market has been primarily driven by a shortage of rentable properties, particularly in the CCR and CBD. As the stock of rental properties has decreased, the mismatch between the demand and supply has been pushing up rental prices.
Tenants have been feeling the pinch in their wallets due to the higher rents, with some needing to look further afield for affordable housing. For instance, some have even resorted to Jurong East for a place to call home. Families in particular have been hard-hit, with large-sized apartments typically being out of reach financially.
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This surge in rental prices has raised concern among Singaporeans, who worry over the possible negative impact on the country’s attractiveness as a global city for foreign talent. Nonetheless, Cheong believes this is a one-off for the market and that rents could soften again in the second half of the year.
Jac Ong of List Sotheby’s International Realty, meanwhile, has observed that landlords have been able to find replacement tenants who are willing to accept their higher asking rents. This may be due to a pandemic-driven demand for larger living spaces, as well as returning Singaporeans reclaiming their own properties.
However, demand for landed homes such as bungalows and Good Class Bungalows has been decreasing in the past few months. Apartment rentals are still being driven by expats relocating to Singapore for the first time or who have been in the city-state for some time, with Americans, Australians, French, British and Chinese among the nationalities.
With more multinational corporations setting up offices in the city, rental demand is expected to remain steady for the rest of this year. While tenants may have to swallow higher rents in the short term, they may find some solace knowing that they could lessen again in the coming months.