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Discussion Starter · #1 ·
Had an interesting discussion earlier this week....If you look at many markets around the world, tenants have many more "rights" than they do in Singapore...For example, there is often a "cap' on the % rent increase that an existing tenant can be forced to pay when they want to renew the lease...

IMO, the governement in Singapore does not want to cool the market too much (ie. by putting back in place those harsh 1997 measures...). However, they want to make sure that the rents do not become so expensive that Singapore starts to become less attractive for foreign talent.

So, my guess is that they will seriously consider a form of rent control...If they put a restriction in place (ie. landlord cannot increase residential rents more than 10-15% per year), then it would definitely help to make things more reasonable for expats and their companies. It would also probably have a mild (but not too serious) cooling effect on property prices (keeping annual increases in line with the rent increases) that would help to stabilize the market for the long term without having the risk of a drastic drop-off in prices.

Interested to see what our SSC members think of this?

Also interested to see how long before this idea is mentioned in the press? :)
 

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Great question!

My observation is that the government is pursing a model of agressive development based on foreign money, but (rightly) beleives its madate to govern comes from providing well for the local population.

So my guess is that we will see a multi- tier markt:

1. Property prices which affects business costs like hotels and office buildings will as far as practical be kept reasonably low though land sales and other supply management policies. Kweck Leng Beng and a few other partially created the short office supply suitation by using white sites for residential units

2. Residential property prices will not be controlled per se, as the government is not concerned about prices for the elite, but the other 95% of the population. For the latter, if required the government will foster a more agressive approach to public housing. My pet theory is monster HDB developments (along the lines of 60 storey high, 1,500 units of 3-5 room flats and able to house 5-10K people) if required

3. Low and average income workers will be given increasing subsidies and special benefits which may cover housing costs (which can be as creative as cheap JTC land to help keep employment in Singapore)
 

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余博士
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From Residential properties prospective;

Although tennant have less right in Singapore but property owners in Singapore get the lowest yield from their properties.

Singapore Properties yield only 3-4% on average compare to 7% in Hong Kong and 9% in Phuket & Bali.

I do not mind giving them all the right if my yield is 7% or more.:)
 

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The govt has not micro-managed free market practices for a long time. There is no shortage of apts available for rental.

All the feedback regarding expat high rents are concentrated on central areas only. Singaporeans have to stay as far as Jurong West, there is no basis to interfere in a free market simply to assist foreign talents to stay in central areas.

Even in today's Sunday Times, the quoted example was someone who insisted on living in Bishan. Also.. tenant nationality plays a big part in whether landlords make available rental units.

Foreign investors are very concerned about caps on how high their investment returns can achieve. Introducing rent control is regressive.

I agree that office rentals is a big concern right now, and it's a supply issue. The govt shd instead relook the policy of regional town centres, and facilitate more Grade A office spaces around MRT stations. For example.. another BFC ard bishan MRT station.
 

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The govt has not micro-managed free market practices for a long time. There is no shortage of apts available for rental.

All the feedback regarding expat high rents are concentrated on central areas only. Singaporeans have to stay as far as Jurong West, there is no basis to interfere in a free market simply to assist foreign talents to stay in central areas.

Even in today's Sunday Times, the quoted example was someone who insisted on living in Bishan. Also.. tenant nationality plays a big part in whether landlords make available rental units.
There are lots of empty apartment, so don't think supply outstrip demand.
For instance within CBD, I can see a lot of units in Arris, El Central are empty when I walk pasts Tanjong Pagar every day.

I doubt those who are real expatriates are affected by the rental, i.e, those with housing allowance paid by company for relocating from overseas to Singapore for a period.

Those who are affected are those foreigners who came to work in Singapore but taking a local package especially those annual basic salary less than S$100k. Most of them had been used to paying low rental in the pasts did not realized they had been enjoying a cheap rental.

Singapore property market had gone through almost 10yrs downturn and lagged behind other cities, so it just make sense rental increase to match capital appreciation.

A lot of Singaporean who earn more than annual basic pay of $100k are staying in HDB or suburban private apartment as well.
I believe people just need to adjust their expectation and move out from core central or central districts to suburban.

In fact Singapore has attracted a lot of middle skilled foreigners into working in Singapore due to MNC setting up regional and global centres in Singapore. Those earning 4 digit monthly pay should consider renting HDB rather than private apartment.
 

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Discussion Starter · #9 ·
All the feedback regarding expat high rents are concentrated on central areas only. Singaporeans have to stay as far as Jurong West, there is no basis to interfere in a free market simply to assist foreign talents to stay in central areas.
the counter argument to this is that the adjustment of having ppl relocate from more expensive central areas to less expensive areas should be gradual, so as to minimize disruption - which creates both economic and social cost.

Example (not real, but I know many similar cases):

- Expat husband with wife (not working) and one kid (school age)
- Salary roughly $10k/month
- Currently paying $4k for 3BR condo in D. 9, 10, 11, or 15 (2yr lease signed in 2005)
- Owner is increasing rent to $6.5k/month (62.5% increase)

Expat is an experienced professional with a regional role in an MNC with responsibilities in a few countries. This job would be very costly for the company to re-hire (even if they find local talent, must still pay signing bonus and / or HR recruitment fee).

This expat could afford to pay 10-20% more but not the full increase. They are now planning to leave Singapore as the high cost and inconvenience of living farther away from children's school is not worth it (if they had a year to search they would consider it, and might possibly buy a flat for own stay, but their landlord is forcing them to pay the higher amount or move out within 30 days).

All I'm saying is that, by limiting the annual increase in a tenant's rent to 10-15% p.a. (so that higher market rents can be phased in over 1-2 years) will certainly allow the Singapore market to adjust at a more moderate, less disruptive pace (giving enough time for existing expats to find suitable replacement housing (and schools) for their families.

Like it or not, health of Singapore economy depends on keeping as much foreign talent as possible....i am personally in favour of most "free market policies" however in this case i am truly worried that Singapore will be shooting itself in the foot in the short term if it does not heed the rental escalation cost issue...(but, then again, i am often wrong so maybe nevermind... :lol: :lol: )
 

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Like it or not, health of Singapore economy depends on keeping as much foreign talent as possible....i am personally in favour of most "free market policies" however in this case i am truly worried that Singapore will be shooting itself in the foot in the short term if it does not heed the rental escalation cost issue
I would tend to agree on the above.....
Last year when Dubai rentals went the way they are here, the Govt intervened and capped increases to 15% - else Dubai was fast losing the attractiveness as a destination for employment - because each prospective employee was then building that into his package negotiation and then the businesses were unable to wear it and hence not get people.
I think we are close to such a situation emerging here and I speak that withe a certain degree of first hand experience. I happen to have got elevated in my company and hence it means a pay hike - guess what - the pay hike per annum is say X $ - howver, the rental hike that I ma going to have to wear as I renegotiate my tenency is X $ + 17k$ . So effectively, after an elevation I am outof pocket by $17 k - and thats after downsizing the apartment !!! I think I am fortunate and there are others who are far worse off. The same goes for office rentals - by the way , some friends weretelling me that their firms are seriously thinking of relocating some of small hubbed specialist regional staff to BKK or KL [ teams of about 10 ] Eg - Compliance Officers for the region or Quantitative Developers who support the SEA region .
 

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I think the enbloc fever has to be controlled as well. If more residentials are being demolished over next 2 years, the rental issue will continue to explode due to the exponential reduction in supply.
- May be govt will impose temporary freeze on enbloc till Dec 2008 until the major new supply kicks in 2009.
- Govt had just imposed temporary freeze on office to residential conversion until Dec 2009 when MBFC kicks in 2010. So similar may happen to enbloc to stabilize the residential rental hike issue.
 

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Up and down everybody tell gahment should do this should do that.Gahment headache man.Listen to those in favour of cooling the market and the opposite camp feeding the fire.Aiyah, if this is a crush and not the boom everybody will be talking **** about what is the gahment doing to prop up the market.Just let the market decide.Let the rich prosper ,let the poor learn.
This is a capitalist society.4 legs is not better than 2 legs.
 

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Just a thought;

If the property market make a U-Turn now, a lot of those eb-bloc property will become empty land.

Market is now flooded with un-sold completed properties which are asking for higher price as compare to the launch price.

Waterplace developer now asking for $1200 psf for a non-seaview unit.
 

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I think the enbloc fever has to be controlled as well. If more residentials are being demolished over next 2 years, the rental issue will continue to explode due to the exponential reduction in supply.
- May be govt will impose temporary freeze on enbloc till Dec 2008 until the major new supply kicks in 2009.
- Govt had just imposed temporary freeze on office to residential conversion until Dec 2009 when MBFC kicks in 2010. So similar may happen to enbloc to stabilize the residential rental hike issue.
An alternative to complete freeze might be to temporarily increase the minimum age of properties eligible for en-bloc to say 25 yrs until it the market stabilises and then slowly decrease it to 20 yrs, 15 yrs , etc.
 

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An alternative to complete freeze might be to temporarily increase the minimum age of properties eligible for en-bloc to say 25 yrs until it the market stabilises and then slowly decrease it to 20 yrs, 15 yrs , etc.
I think govt will not go the harsh way to freeze complete enbloc, but will definitely tightened the policy after the legal review that's going on after public feedback. This will make the enbloc more difficult going forward, and in a way help to slow down the depletion of supply due to enbloc.

Given the recent large publicity of complaints from expatriates or foreigners working here on rental hike, the govt used to be business prone is likely to do something to help, but don't think will be a harsh one to affect the property boom. Govt will not be harsh as long as the property boom is not due to over-speculation at the mass market causing too much bubble.
 

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I think govt will not go the harsh way to freeze complete enbloc, but will definitely tightened the policy after the legal review that's going on after public feedback. This will make the enbloc more difficult going forward, and in a way help to slow down the depletion of supply due to enbloc.

Given the recent large publicity of complaints from expatriates or foreigners working here on rental hike, the govt used to be business prone is likely to do something to help, but don't think will be a harsh one to affect the property boom. Govt will not be harsh as long as the property boom is not due to over-speculation at the mass market causing too much bubble.
:)
 

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Firstly.. there is no supply issue for residential property. It's simply a matter of pricing. The latest wave of foreign investment in Sg was not based on the premise that Sg offerred the lowest cost of operation. It was about good infrastructure, stable political and economic environment, etc etc.

If the rental market has outpriced itself, then let the market adjust itself.

Enbloc policy is not just about supply. It's also about urban renewal. Will the next wave of foreign investors want to rent/ invest in 30 yr old properties? Are the existing apts sized/designed correctly for the future?

Just look at HDB flats.. lifts not stopping at every floor, electrical current limitations. Enbloc is necessary to move forward. If there are buyers, there will be sellers. It's simply about price.
 

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I think govt will not go the harsh way to freeze complete enbloc, but will definitely tightened the policy after the legal review that's going on after public feedback. This will make the enbloc more difficult going forward, and in a way help to slow down the depletion of supply due to enbloc.

Given the recent large publicity of complaints from expatriates or foreigners working here on rental hike, the govt used to be business prone is likely to do something to help, but don't think will be a harsh one to affect the property boom. Govt will not be harsh as long as the property boom is not due to over-speculation at the mass market causing too much bubble.


I agree that the government should adjust its policy to manage rental price to keep Singapore competitive but it should not interfere with the free market. It could release more HDB for rental or release more land for condo development. However, it should not cap rental price or growth.

If I know an expatriate earn $150k-200k pa and want to stay in the Core (CBD, Orchard area, etc.), I will tell him/her off in the face. Why should he/she stay in the Core while I stay in the Suburb?

To me, the Core is meant for expatriate with at least $300k pa. Otherwise, move out of the Core!

Why should we stay in HDB flat with $100k pa while they stay in a condo? It doesn't make sense.

I welcome foreign talents and they are important to us. However, they should be realistic to accept that all are us should be treated equally. At the end of the day, it must be a win-win for all.
 

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There are lot of condo outside core area for rent. It is whether the tennants want to sacrifice some time to travel to & fro......
 

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Discussion Starter · #20 ·
IIf I know an expatriate earn $150k-200k pa and want to stay in the Core (CBD, Orchard area, etc.), I will tell him/her off in the face. Why should he/she stay in the Core while I stay in the Suburb?

To me, the Core is meant for expatriate with at least $300k pa. Otherwise, move out of the Core!

Why should we stay in HDB flat with $100k pa while they stay in a condo? It doesn't make sense.
sorry to say but this is a very ignorant way of thinking....not to flame you personally, just want to point out

1. Moving out of the core is absolutely a good idea - but is it fair to ask a family to do so on 30 days notice? You might think that expats will do so without question, but most of them also have the choice to move back home....If you are an expat, will you bother to move out to a suburban location and downgrade your lifestyle or will you just move home, where you can easily live a higher lifestyle? Why do you want to stay in Singapore?

This is the real problem that government must deal with....You might think in terms of black and white "fairness", but reality is not so simple as it is a fact that Singapore will suffer if a large number of these expats and their companies move out of Singapore...

2. Also, on the topic of fairness.....Singapore government policy already "forces" expat to stay in private condo (not allowed to buy landed property - with few exceptions - and not allowed to buy HDB). So, while you might consider that we are living here in a "free market", it is not exactly true......If you want foreigners to stay in HDB then you should support government giving them the right to buy any property they want (not just certain properties in certain areas...). This will be truly free market...

3. By the way, we are not just talking about the Core here....3BR condos in Redhill are also renting over $5k/month already...the point about controlling rental increases is an island-wide issue (and will become even more serious in the next 2 yrs).

I don't know about you, but to me the key question is: if you limit annual rent increases to 10-15% p.a., who do you harm? Maybe some investors like you and me might complain, but even these people are still able to rent their units at higher prices.....So, there is no real social or economic cost to anyone...

On the other hand, if you don't have such a measure, IMO the downside risk is much greater...
 
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