Rents here too high? Not so, say expats

Gee, if I were a managing director or head of a company, I might be just as out-of-touch as the people interviewed in this article are.

*see below article for update

From Straits Times – July 29, 2007

“Though rents are rising, expats say housing here is more affordable than in many major cities

By Melissa Sim

MR CHARLES TIDSWELL, 34, managing director for South-east Asia at IT company Facilitate Digital, pays about $3,000 for his 1,100 sq ft apartment at The Legend in Bukit Timah Road. When he was in Hong Kong, he paid $4,500 for a 900 sq ft apartment. He moved here in 1998. ‘You could say that Singapore’s prices are possibly 10 years behind those of Hong Kong’s,’ said Mr Tidswell. — ST PHOTO: WANG HUI FEN

SINGAPORE and Hong Kong are keen competitors in most things but when it comes to rent, there is only one winner.

Ask Mr Jason Longley, the regional manager of an insurance company. A year ago, he was paying $8,500 a month to rent a 900 sq ft apartment in Hong Kong’s prime Peak area.

Now he rents a 1,400 sq ft flat at Leonie Hill off Grange Road for just $5,500.

Mr Longley, 35, said Singapore’s cheaper rent was a key factor in his decision to relocate: ‘I definitely saw rent as a huge expense in Hong Kong.’

It also helps put into perspective the growing complaints about rising rents.

Urban Redevelopment Authority figures out last Friday showed that residential rents rose 10.4 per cent in the April to June quarter and are up 31.2 per cent over the past 12 months.

But expats and agents told The Sunday Times that Singapore rents are still cheaper than in cities such as Hong Kong, Tokyo, London and New York.

A new survey by ECA International, a human resource consultancy, showed that rents here were 45 per cent less than the average price in Tokyo and 40 per cent less than in Hong Kong.

Singapore was the eighth most expensive place to rent a three-bedroom flat in Asia and 15th most expensive in the world – below Hong Kong, Tokyo, New York and London.

Investment banker Timothy Rice, who moved here last August, can testify to that.

Mr Rice, 27, pays $1,400 for a 350 sq ft studio in Kelantan Lane, near Bugis Junction. He said such a flat in an equivalent London location would still cost about the same figure – but in pounds. That is about $4,300.

Mr Masamitsu Kawasumi, 44, chief bank representative of the Development Bank of Japan, arrived here last month and was struck by the rental gap between Tokyo and Singapore.

Tokyo’s hip Roppongi area, with its many clubs and restaurants, has rents of about $13 per sq ft. Orchard Road’s $6 psf seems like a bargain.

Mr Thomas Preben Hansen, 32, chief executive of a listed marine firm, has lived in Shanghai and London: ‘Rents had become very cheap since 1997, and still have some catching up to do.’

He anticipated the rent squeeze and so bought a flat in Ewe Boon Road, off Bukit Timah Road, when he arrived in May.

A rental squeeze is exactly what Ms Isabelle Scali, 30, is bracing herself for. The public relations manager thinks Singapore is relatively more costly than London.

She pays $1,800 – nearly half of her salary – for a 1,200 sq ft flat at Sunshine Plaza off Prinsep Street.

In London, she said she spent just a third of her salary on a 700 sq ft studio flat in Balham, southwest London.

Ms Scali, who has signed a two-year lease, said rental costs will determine if she stays in Singapore.

Mr Rajesh Malkani, 43, who lived in Hong Kong for 13 years before moving here in 2005, said: ‘I don’t expect Singapore’s prices to reach Hong Kong levels because there is still land here. But I do expect them to go up.’

Mr Malkani, the global head of sales and business development at Standard Chartered, rents a 4,000 sq ft bungalow in Sunset Place. He would not reveal his rent but said it would get only half the space in Discovery Bay, which he feels is a comparable site in Hong Kong.

Given the decade-long property slump here, Mr Simon Smith, a senior director at Savills Asia Pacific, thinks rents will keep rising for the next one to three years.

But Mr Rice is not complaining: ‘Compared to Hong Kong, New York, London – Singapore is still cheap,’ he said.

Additional reporting by Teh Shi Ning

Follow-up – a commenter on the Straits Times wrote this very valid point:

“Yesterday p6 of the Straits Times has a seriously misleading comparator table labelled ‘World Highest Apartment Rentals’. Why is it misleading? Well the ST took no account of the purchasing power parity (PPP) between the markets. Instead it took price in each market and converted directly to SGD. This is extremely poor economic reporting and low brow journalism. Take, as an example London (rental USD5,901) and Singapore (rental USD3,364). The article maintains that the London apartment is more expensive. On what grounds, except for absolute dollar terms is this true?
To demoinstrate my point – if you take the median monthly wage in London (USD5,796). Compare this with the median monthly wage in Singapore (USD1,333) (from MoM). Now divide the salary by the relative rentals 5,796/5,901, gives 0.982 for London. For Singapore 1,333/3,364, gives 0.396.
This shows that, relative to earnings and in the context of its own market environment (0.982/0.396), Singapore properties are nearly 2.5x as expensive as in London. In fact if you were to do this exercise you would find that Singapore is the most expensive place of all your cities for rental prices.
How can the ST have such poor quality economics journalists? If Singapore continues in this stae of denial it will have an unbreachable gulf between HDB and private property. What kind of state thinks it is beneficial to have 2 completely distinc markets – one for real people and the other for the tiny percentage who can afford to rent properties bought by offshore investors whose money may have questionable origin. How does this really help Singapore’s economy?”

One response to this post.

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