Will the rental market continue to favour landlords?

Concerns over the affordability of leasing in Singapore’s rental market have been growing since the start of 2022. Predictions of a rise in rental prices have largely come to pass and the market has swung in favour of landlords in recent quarters. This has caused much outcry from tenants.

The Real As State video produced by EdgeProp Singapore covers this heating up of the rental market. Alan Cheong, executive director of research and consultancy at Savills Singapore, explains that rental increases will likely hit their peak in the first half of 2021, before generally moderating in the second half.

Bukit Timah area is undergoing rejuvenation with plans to improve connectivity and add green spaces, such as Railway Corridor and Beauty The Myst World plans.

Data from the URA shows that the non-landed private residential rental index went up 30% y-o-y. This is much less than the jump in 2007, when the index increased 40% y-o-y, due to a surge in demand from investors looking to capitalise on the Marina Bay Sands project.

Cheong notes that the mismatch between available rental supply and incoming tenant demand is driving up prices. As a result, some tenants are forced to seek more affordable housing further from the Central Region. The situation is particularly hard on families, as larger apartments become more and more unaffordable.

Cheong believes that such high rental prices could threaten Singapore’s global appeal to foreign talent. He believes, however, that this is a “one off situation” and expects rents to soften in the second half of the year.

Jac Ong, associate vice president at List Sotheby’s International Realty, confirms that replacement tenants for higher prices can generally be found. Most of these tenants are expats coming to Singapore for the first time or have been here for some time, and are mainly from French, American, Australian, British and Chinese backgrounds.

Ong notes, however, that rental demand for premium homes, such as bungalows and Good Class Bungalows, has dropped in the last few months. She believes that on-the-ground enquiries for apartments will remain relatively steady for the rest of 2021 due to an influx of expats to Singapore.

On the whole, it is clear that the Singapore rental market is heating up. Landlords and tenants will want to pay close attention to the prevalence of higher rents as the situation could have a wider impact on the global city’s affordability and attractiveness.