The rents for luxury apartments have increased due to the demand from high-net-worth individuals.
More from OMY: Ultra-high-net-worth families setting up offices in Singapore
The country’s property market saw rents rising to record highs in 2022. While signs have pointed to it slowing down, landed property rents have continued to increase, with a 14.5% rise in the first quarter. This came after numerous quarters of consecutive hikes, adding up to a YoY jump of 39.3%.
More from OMY: More properties to be launched in 2023
According to Professor Qian Wenlan, director of the National University of Singapore Institute of Real Estate and Urban Studies, the sharp rise can be attributed to the low supply of luxury homes, as well as the strong demand from high-net-worth individuals.
As of the first quarter of 2023, Singapore only has 73,000 landed homes, which is less than 19% of the total private housing stock.
“Therefore, the amount of landed houses provided for rent to the market is inelastic. Whether the rent increases basically depends on the demand of high-end tenants in the market,” Professor Qian said.
In the last two years, family offices in Singapore have also pushed up the demand in the high-end rental market. Since these foreigners are not eligible to buy landed homes, they settle for the high rents.
Rent hikes can be observed across detached, semi-detached, and terrace houses. These landed properties are usually rented by ultra-high network individuals and families that are setting up their businesses or offices in Singapore.
“While some foreigners might already own a non-landed private property, they are unable to purchase a landed property as they are not Singapore citizens or PRs (permanent residents). As such, they might be willing to pay a premium to rent a spacious residence to accommodate their lifestyles,” said Tricia Song, CBRE’s head of research for Southeast Asia.
“While rents for condos are likely to stabilise … rents for landed may have room to go up further,” Song added.
With the recent increase of ABSD for foreigners to 60%, more foreigners may consider renting instead of buying properties.
More from OMY: Buyer’s Stamp Duty for Foreigners Doubled to 60%