Singapore’s soaring expat rents undermine bid to oust Hong Kong as finance hub

Two years ago, Lauren arrived in Singapore from Hong Kong wanting more living space for her growing family. Now, they intend to move back. The reason: a 61 per cent increase in the rent on their four-bedroom flat and the high and rising cost of living.

A British mother of three whose husband works in finance, Lauren, who did not want to use her full name, said her experience of Asia’s two rival financial centres has been an eye opener. “Everyone thinks Hong Kong is the most expensive city,” she said.

Her situation is not unusual in the cosmopolitan city-state of 5.6mn people in which a quarter of the workforce is foreign.

A lack of housing supply due to construction delays during the coronavirus pandemic, as well as a wave of new arrivals from places including Hong Kong, China, Europe and Japan last year, pushed residential rents to the highest on record, according to the government’s private residential property rental index.

Rent per square foot in some central areas has overtaken Hong Kong for the first time, data shows. Analysts warn that prices could rise as much as 20 per cent again this year as real estate agents report bidding frenzies for desirable properties.

The situation underscores the cost of Singapore’s campaign to replace Hong Kong as the Asian destination for money and investment. Tough Covid-19 restrictions in the Chinese territory encouraged many to relocate, and the number of Employment Pass and S Pass holders — the main visas used by foreign professionals — increased 4.5 per cent to 338,000 in the 18 months until the end of June last year.

But higher rental prices could undermine Singapore’s attempts to become Asia’s dominant financial hub and attract the best talent, experts said.

Singapore’s government has been reluctant to help a mostly affluent minority. In November, in response to questions from members of parliament, it said that rent was only one factor for those considering a move to the city-state.

Others “include Singapore’s standing as a global business hub, our strong external connectivity, our good trade links, our education and healthcare standards and the quality of life”, said Desmond Lee, minister for national development.

Still, the high cost of living in Singapore, even with low taxes, is creating a “real crunch”, said Woo Jun Jie, a senior research fellow at Singapore’s Institute of Policy Studies. “It is something foreigners face more of the brunt of because most locals live in public housing and go to public schools.” About 80 per cent of Singaporeans live in lower-cost public housing.

“Singapore had a huge influx of people and business since Covid, we were seen as a safe haven during the pandemic. But [high rents] will affect Singapore as a business hub and I think some of it [business] will inevitably flow back into other markets, especially smaller players,” he added.

Nicholas Mak, head of research and consultancy at the ERA Realty Network, said rents could grow another 10 to 20 per cent this year. “Singapore’s small size means when you apply temperature, things boil fast. There is not a lot of spare capacity,” he said.

Emma, a marketing professional, moved with her family to Singapore from Hong Kong five years ago and was living in a three-bedroom flat in the island-resort area of Sentosa. The landlord informed her in November the rent would increase from S$7,000 ($5,200) per month to S$14,000. When they tried to negotiate, they were told to look in other suburbs.

“Our salaries have not gone up by 100 per cent or even 50 per cent — that is all our savings,” she added. She did not want her real name to be used for fear of jeopardising negotiations over their deposit. The family has since decided to return to Australia.

Shantanu Upadhuay, from India, works at a popular restaurant as front-of-house staff in the city’s Chinatown district. The 29-year-old is also moving to Australia with his fiancée after his S$500 rent more than doubled. “I can’t see myself getting ahead here, I have no savings now. In Australia, you can afford a car and have a life,” he said.

Real estate agents agree there is a problem. “I witnessed a crazy incident last year with tenants outbidding each other. It lost control. People are very upset,” said Edna Liong, who liaises with tenants for Huttons Asia. “What some landlords are asking for is not reasonable.”

Another agent, Ina Sultan of ERA, this month made headlines for asking 11 Chinese tenants to vacate their overcrowded flat in a public housing unit. Sultan said: “The problem of overcrowding is not new here, but I expect to see more of this because of prices.”

The bigger picture, agents said, was that rents in Singapore were still catching up after years of decline. “Landlords suffered with low rents for many years and nobody brought this issue up,” Sultan added.

It is clear that for all its attractions, high costs in Singapore are becoming a deterrent, said Jon Goldstein, managing partner of Page Executive Singapore, an executive recruiter. “The question at the mid-level of ‘should we stay or should we go’ — you are hearing that discussion a bit more.”

Even those who have found apartments are unsure about the future.

“If you told me five years ago I would be paying S$6,500 for a very old three-bedroom apartment, I would have said that is insane,” said Marta, a 34-year-old working mother who also did not want her full name to be published for fear of jeopardising her visa.

She moved to the flat last year after her previous landlord asked for a 60 per cent increase in rent. “This was the best option we could find, but after this lease expires, we may consider leaving.”


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