Singapore firms scramble to soften blow of soaring rent costs

Robert Half

09/05/2023 24:00

By Chen Lin
       SINGAPORE, May 9 (Reuters) - Companies in Singapore are
partially paying housing costs of employees and even relocating
staff to cheaper neighbouring cities to help them tackle home
rents that rose last year at their fastest rate in 15 years.
    But with private housing rents in Singapore maintaining the
scorching pace of gains in 2023, those steps are likely falling
short, forcing expatriate workers to even consider leaving the
city for good.
    An exodus of foreign talent due to unaffordable housing
costs would be a setback to Singapore in fulfilling its
ambitions of becoming a technological and innovations hub. Those
factors could also reduce the city-state's appeal to companies
and their employees as an alternative to Hong Kong.
    "We are weighing our options...whether the inflated price
tag now is really worth the edge Singapore has over its
neighbours," said Lee Soo Min, a business development executive
at a digital advertising firm who saw a 70% jump in her monthly
rentals and is examining relocating to another Asian city.
    Foreigners without permanent residency account for 28% of
Singapore's 5.6 million people, according to government data.
Most tend to rent homes, leaving them vulnerable to the
landlord's market that has been seen since 2022.
    Rents for private properties in Singapore increased about
30% last year, with luxury residential rent gains outpacing
those in London and New York in the fourth quarter, said real
estate consultant Knight Frank. Private property rents tacked on
a 7.2% gain in the first quarter of this year, after jumping
7.4% in the last quarter of 2022.
    James Ong, an assistant product engineer from Malaysia
employed in an aviation company receives an additional S$70
($52.73) a month in rent support from his firm but that barely
covers the 50% increase in his monthly rent to S$4,000.
    In a survey report published in March, the European Chamber
of Commerce in Singapore said about 40% of 268 firms it polled
were giving employees additional aid of more than S$1,500 a
month because of rent increases. If the situation worsens, 70%
of the firms are ready to move foreign staff overseas, it said.
        A surprise tax hike announced last month on foreigners'
property purchases could keep rents elevated as potential buyers
would now be driven into renting, offsetting some of the
moderating impact from the government's move to build more
homes, according to analysts.  
    In response to Reuters' queries, the government acknowledged
"significant concern" about rental trends that it said are
"comparable to major cities". But the national development
ministry and the economic development board said in a joint
statement that prices should fall as more homes are built.
    
    EXPAT WOES
    Recruitment companies said most expats in Singapore do not
get housing allowances as companies are controlling their costs
amid an uncertain global economy.
    Those who do get housing aid would have it capped at 30% to
40% of their monthly salary, Andrea Wong, managing director at
human resource consultancy Robert Half, said.
    Sachet Sethi, a senior manager at recruitment firm Robert
Walters, said even those in management roles are finding it
difficult to cope with costs.
    "For senior management movements, candidates have been
asking for housing assistance rather than equity or shares to
cover the increasing cost," he said, adding that overseas
candidates are also taking longer to decide on relocating to
Singapore.
    Joshua Yim, chief executive at recruitment firm Achieve
Group, said companies are increasingly offering remote working
options for white-collar workers and some are relocating their
staff to cheaper cities such as Kuala Lumpur and Bangkok.
    An executive managing a team of 100 engineers for a tech
firm in Singapore said he is considering starting a satellite
office on the Malaysian island of Penang so that they can retain
talent.
    The Singapore government, however, said the city-state
"continues to be a very liveable" city, citing healthcare,
education, connectivity and rule of law, and that it draws
"significant investments". 
    "Higher demand for rentals can only be the result of more
attractiveness to global talent and not less," it said. 
    That is cold comfort for Briton Natalie, who has been living
in Singapore for 15 years and is facing a S$3,200 increment in
monthly rent.
    "This is absolutely the biggest jump in rent I've seen so
far ... myself and many friends will have to leave Singapore if
the situation gets worse," said Natalie, who did not want her
last name mentioned.    
($1 = 1.3274 Singapore dollars)

 (Reporting by Chen Lin in Singapore; Editing by Xinghui Kok and
Muralikumar Anantharaman)
 ((Lin.Chen@tr.com; Twitter @chenlin_sg;))