Singapore’s soaring housing rent tops Hong Kong, reducing Lion City’s advantage in luring global talent

Rents for private homes in some parts of the Southeast Asian business hub now surpass Hong Kong rents in terms of price per square foot
Industry watchers expect rents in Singapore to continue rising in 2023, albeit at a much slower rate, as Hong Kong’s rebound

Hong Kong property

Cheryl ArcibalandLam Ka-sing

Published: 11:00am, 19 Feb 2023

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Singapore’s average home rent has surpassed even Hong Kong’s notoriously costly charges, as owners took advantage of surging demand in a landlords’ market to jack up their asking prices.

Singapore’s average monthly rent in the central region rose 29.7 per cent last year to S$5.77 (US$4.32) per square foot in December, according to the city’s Urban Renewal Authority (URA). Hong Kong’s average rent fell 4.1 per cent last year to HK$33.54 (US$4.27) per sq ft in December, Midland Realty said.

All over Hong Kong, average rental charges are now cheaper in US-dollar terms per sq ft than in Lion City, according to a comparison of prices across three major locations in both cities compiled by South China Morning Post. Tseung Kwan O in Kowloon, the Mid-Levels on Hong Kong Island, and even Yuen Long in the New Territories are now cheaper than comparable areas in Singapore, the data showed.

“Robust leasing demand has fuelled rental growth in Singapore, while in Hong Kong, the departure of expats and stricter Covid-19 measures in the past years have weighed on the residential-leasing market,” said Norris Low, director of corporate leasing at PropNex Realty, one of Singapore’s largest real estate agencies.

The hefty rent increases in Singapore have started to frustrate expatriates working there, according to Benjamin Chow, head of Asia real assets research at MSCI.

“For Singapore, residential rents have been going up a lot over the past year”, he said. “Some of our [expatriate] colleagues have been complaining because they … are bearing the brunt of these high rental costs”, Chow said. “Hong Kong started from a very high base, while Singapore is coming off from a low base”.

Singapore’s soaring housing cost has diluted the Lion City’s competitive advantage in attracting expatriate talent, as it vies with Hong Kong for global talent in the quest to be Asia’s financial hub.

Before the Covid-induced slump in Hong Kong’s housing market, the city ranked as the least affordable urban centre on Earth several year’s running, retaining the dubious honour as recently as June 2022.

Rental charges fell with the exodus of people – both expatriates and local residents – as three years of harsh anti-pandemic measures combined with six months of street protests to drive the city’s economy into recession. Average home rent declined by 12.5 per cent since July 2019, according to Midland.

Hong Kong’s high rents work against plans to bring back top talent

Singapore’s political stability and widely praised management of the pandemic allowed the city to shine, making it a more attractive base for multinational companies.

A number of companies like the French bank Societe Generale even temporarily relocated their staff to Singapore to avoid Hong Kong’s 21-day quarantine at the height of the pandemic.

Population shifts have spilled over into the rental market. At the Mid-Levels, a popular residential enclave for expatriates on Hong Kong Island, average rent fell to US$5.60 per sq ft, less than the US$6.09 in Singapore’s District 10, according to data provided by 28hse.com, iproperty.com and Property Guru.

At Tseung Kwan O in Kowloon, the average rent declined to US$4.94 per sq ft, much less than the US$6.64 asked for at Singapore’s District 11. The same gap exists even in Yuen Long, where the average monthly charge to rent at Yoho Midtown was US$4.46 per sq ft, cheaper than the US$6.01 per sq ft at J Gateway in District 22.

Still, the Singapore market will not see a repeat of last year’s skyrocketing rents, said Low of PropNex. Alan Cheong, executive director of research and consultancy at Savills in Singapore, agreed, saying rents will increase by 5 to 10 per cent.

“The rate of increase should be front-loaded to the first quarter of the year but thereafter, it may decelerate as more new supply comes on line and economic challenges bite”, Cheong said.

Customers at the Market Street Hawker Centre during lunch hour in Singapore, on April 26, 2022. Photo: Bloomberg

About 18,000 new private flats are expected to hit the market this year, which “could swing the pendulum towards a tenant market,” said Cheong.

However, he added that any correction is unlikely to erase all of the gains.

Meanwhile, given that Hong Kong has scrapped its anti-pandemic measures, the city’s rents may rebound this year.

“The diametrically opposing rental markets between Singapore and Hong Kong may ultimately reverse the flow of expatriates back to Hong Kong, especially if the latter is unravelling itself from the pandemic measures”, Cheong said. “But we believe the flow of Hong Kong expats to Singapore has been severely overplayed. The majority of inquiries for housing from foreigners coming in are not from Hong Kong”.