Rents soar, expats groan

Last month, when German Peter Hartmann’s two-year lease on his One Chatsworth apartment expired, the landlord told him his new rent would be $13,500 — a spike of 80 per cent.

The sales director, who had been paying a rent of $7,500 a month for the District 10 five-room apartment, was shocked.

“The reason they gave was that the market has changed. It seems to me that there is no legal limit,” said Mr Hartmann, who has been working in Singapore for 12 years.

“It was way over our budget and we — my wife and two children — had to move out. You could buy a villa with a garden in Germany for that kind of money.”

The 57-year-old expatriate now rents a smaller, three-bedroom semi-detached house near the Botanic Gardens for $6,000 a month.

What is happening? Are landlords cashing in on the economic boom? What relief can expats hope for?

Property agents told Today the increase was a classic scenario of “demand and supply”. The rates could rise even higher as the market is still hot, property watchers said.

When contacted, the agent in charge of Mr Hartmann’s former apartment said when the German rented the place two years ago, the property market had not picked up as much. Since then, the estate has also been renovated, said the agent who declined to be named.

“The apartment is now worth $4.4 million. At $13,500 a month, you are looking at a monthly return of 3.5 per cent, still not quite our 5 per cent target,” she said.

Mr Hartmann belongs to a growing group of tenants — many of them foreigners — who are reeling from the effects of a property market rebound. Many have been used to low rental prices, depressed by the last economic crisis, and are now finding it hard to reconcile with rising prices as the market adjusts itself.

Among the hardest hit are low- to middle-level expatriates from countries like India, China or the Philippines, who do not enjoy relocation housing perks or get help from their new companies to look for accommodation.

“There is an increase of foreign talent and middle management executives coming to Singapore,” said property firm Propnex chief Mohamed Ismail. “The economy is good now and there is an influx of middle-management level expatriates — especially in the IT and nursing professions.”

Some expats have vented their frustrations on local property online forum One complained about the $1,400-a-month rent being charged for a three-room HDB flat, which had “a miserable bathroom” in its master bedroom.

This newspaper has also received letters from some readers who were unhappy about the soaring rents. One of them, senior application specialist Faisal Saeed said he moved out of his three-room condominium apartment to an HDB unit when the rent rose by $700.

“These price increases are crazy,” he wrote, without saying how much rent he was paying.

But there are signs that some landlords are cashing in on the boom, with some of them accepting the highest bid from desperate tenants. “If we as tenants stick together and stop the bidding nonsense, I am sure the prices can be controlled,” he added.

Property agent Mr Zulkifli (not his real name), told Today he saw 10 interested parties yesterday for a four-room flat in Tampines, which he was willing to rent out for $1,200.

A year ago, it would have cost $1,000 to rent the flat.

Nine of those who viewed the flat were professionals from India and the Philippines. “They complain about the price but they have no choice,” he said.

When told that another four-room flat in Tampines St 43 was going for $1,800, Mr Zulkifli said it was “crazy”.

But the relaxing of rent rules for HDB units — freeing up more than 600,000 government-built apartments for rent — could provide a damper on soaring rents.

Employers might also see the need to provide or increase rent allowances if they want to continue to attract foreign talent, said Propnex’s Mr Mohamed, as rates are set to rise further, by another “20 per cent” over the next 12 months.

Mr Donald Han, managing director of property consultancy firm Cushman and Wakefield, predicts a peaking in one to two years’ time.

“The rise in property market is in line with the pickup in economy, which has done fantastically well in the last 12 to 18 months,” he said.

That might provide some relief to Indian professional Ms Lathi (not her real name) who recently moved with her family to a one-bedroom flat in Toa Payoh Lorong 6 where she pays $850 a month. The rent of a four-room flat in Jalan Bahagia in Whampoa, where she last stayed, had gone up to $1,300 from $950 a month.

“I like working in Singapore because it’s clean and safe,” Ms Lathi, 31, said. “But if the situation gets worse, we might have to pack our bags and leave.”

Source: Today, 16 April 2007

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