Hefty rents force expats here to downgrade or buy

From May 28 Straits Times (by Joyce Teo):

“RENTS of private homes are rising so fast that some expatriates are being forced out of prime areas, sometimes into HDB flats, while others are choosing to buy instead.

Expats have been complaining about soaring rents since late last year, with some facing rises of 50 to 100 per cent or more when their leases come up for renewal.

‘I entered this (business) at the end of 1993 and I have never seen such huge rental increases,’ said leasing agent Raymond Han.

Savills Singapore’s director of corporate real estate, Mr Simon Hill, said most of his firm’s recent deals in districts 9, 10 and 11 were at significantly higher rental levels.

‘Certainly, there were no deals done at below a 50 per cent rise in rent,’ said Mr Hill.

An Australian who faced a 66 per cent rent hike for his 1,250 sq ft apartment in Newton recently moved into a HDB flat, preferring that to a condo unit in poor condition.

He now pays $1,500 for a five-room flat in Ang Mo Kio, well under the $1,800 he was paying on his old lease.

‘There is a perception that expats come here on huge salary packages,’ said the expat, who is a teacher. ‘Many are lower-rank professionals like me. So this rental issue just doesn’t come down to a need to revise salary packages.’

He said his colleagues are also reporting exorbitant rent increases.

‘But our rental assistance has increased by only $100 or $200 a month,’ he added.

Official data shows that rents of non-landed homes rose by 8.1 per cent in the first quarter this year, up from a 5.3 per cent rise in the last three months of 2006.

Overall, residential rents remain about 29 per cent below the 1996 peak. But market watchers say the data reflects the situation in the whole market, not just recent renewals or deals in coveted condos and prime areas.

Asking rents at Ardmore Park in the Orchard Road area, for instance, have shot up to between $17,000 and $18,000, from $14,000 to $15,000 a year or two ago.

But some tenants with ongoing leases at the posh estate could still be paying as little as $12,000 a month.

‘I would say the huge increases started only in January,’ said Mr Han.

He is helping an Australian banker find another home, after the expat’s landlord demanded $6,500 a month more for his four-bedroom bungalow in Bukit Timah. That would have meant a monthly rent of $18,000.

The hefty rises have also prompted some frustrated expats to buy instead of rent, said property agents.

Housewife Cara Killham and her husband, a teacher, chose to buy after rental demands for their Clementi condo became too extreme.

‘The rise in rentals got us looking for a place. That was the tipping point,’ said Ms Killham, a British citizen who came here eight years ago.

The couple recently decided on a unit of about 1,600 sq ft in Dairy Farm Estate on Dairy Farm Road.

‘Our mortgage and condo fees would still be less than the monthly rent,’ she said.

Mr Hill of Savills Singapore told The Straits Times: ‘What we are seeing is a massive resistance building against the rental increase.

‘Either companies won’t bring in so many expats, or expats will move out of districts 9, 10 and 11.’

Yet, there are still expats, mostly those new to Singapore, willing to take up the new rental offers, agents said.

Apart from strong demand, rents have also risen as a result of tight supply caused by the many collective sales.

It means a double whammy for companies, as rents for quality office space have risen sharply as well.

‘Finding a new place is very difficult,’ said an expat in the technology sector. ‘We have made a number of offers and had cheques cashed, only to be told that the landlords had changed their minds.’

‘It has been very stressful, and has forced us to reconsider our future in Singapore.’



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