Rental boom allows landlords to jack up prices and demand:'Pay more or get out'

May 13, 2007

Rental boom allows landlords to jack up prices and demand:

'Pay more or get out'

Tenants feel the heat, with some forced to downgrade, as rents of private units spike

By Melissa Sim

WHEN the lease on her River Valley apartment came up for renewal, 31-year-old operations manager Jordana Brumby was told her rent was going up by $1,000 a month - an increase of 55 per cent from the $1,800 she used to pay.

It was galling, but the Australian, who now pays $2,800 a month for a three-bedroom unit at Nathanville, felt she had no choice because 'everything else was much dearer and not as attractive'.

After about eight years of stagnation, the rental market has been picking up steadily in recent months.

Bad news for tenants, good news for owners.

Urban Redevelopment Authority (URA) figures show that private residential property rents rose 7.6 per cent in the first quarter of this year, compared with a 5.3 per cent increase in the last quarter of last year.

Property agents said that since last year, rents have gone up by at least 20 per cent to 30 per cent across the island, and not just in the prime central districts such as Orchard, Newton and Tanglin.

According to figures from property agency ERA, rents in the western parts of Singapore such as Bukit Batok and West Coast have increased 28 per cent, while rents in eastern areas like Tampines and Pasir Ris have risen 23 per cent.

Although rental prices have surpassed the last high in 2000, they have yet to break the 1998 records.

But ERA assistant vice president Eugene Lim predicts that 'at the rate we are going, there may be a new record high this year'.

Mr Lim said the buoyant rental market is due to strong demand from foreigners.

And generally, when the economy is good, as with other bustling cities like Hong Kong and London, ' there are more expatriates who need homes', said Mr Mohamed Ismail, chief executive of property agency PropNex.

High demand is clashing with limited supply, due to the 'fall in stock of property available for lease due to collective sales', said Mr Lim.

He added that the market has lost about 6,000 units in the past two years.

In contrast, the number of foreigners coming to Singapore grew by 9.7 per cent last year to 875,500, the biggest leap in six years.

While tenants feel the squeeze, landlords like Madam Jenny Khoo are celebrating.

Madam Khoo rented out her 1,340 sq ft apartment at Tanglin Park for $3,100 a month last year. This year, a new tenant was willing to pay $5,200, an increase of nearly 70 per cent.

'We were expecting more rent, but we didn't expect it to be so high,' said the housewife.

Rentals have even gone up for HDB rooms.

Suddenly, it is no longer a buyer's market and landlords have the luxury of adopting a take-it-or-leave-it attitude, forcing many tenants to downgrade.

When engineer Sue Lim, 27, moved into her three-bedroom unit at Springdale Condominium in Upper Bukit Timah in June 2004, her rent was $1,300 a month.

Last June, her landlord raised it to $1,400. When the rent was increased again to $1,800 in January, she decided to downgrade.

Ms Lim now pays $1,200 for a four-room HDB flat in Toh Yi Drive.

Many who have not downgraded are struggling.

'About a third of my pay now goes to rent and it's burning a hole in my pocket,' said Miss Brumby. 'I'm really starting to regret it.'

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'About a third of my pay now goes to rent and it's burning a hole in my pocket. I'm really starting to regret it.'
MISS BRUMBY, on agreeing to pay an extra $1,000 for the rental of her Nathanville condo unit after a lease renewal

`We were expecting more rent, but we didn't expect it to be so high.'
MADAM KHOO, who rented out her apartment at Tanglin Park for $3,100 a month last year. This year, a new tenant was willing to pay $5,200, an increase of nearly 70 per cent.