Singapore home rents catch up with Hong Kong’s as fortunes of rival business hubs diverge


At one point – in the first quarter of the year – the gap had narrowed to as little as 6 per cent with rents in Singapore at about US$3.78 per square feet, nearly catching up with Hong Kong’s US$4 per sq ft.

The Riverfront Residences residential project in Singapore, on Sunday, June 4, 2023. The government reiterated it expects 40,000 home completions this year – the highest in the last five years – and about 100,000 by 2025. Photo: Bloomberg
“Rents are a function of demand and supply,” said Henry Chin, global head of investor thought leadership and head of research, Asia-Pacific for CBRE. “Both cities are in completely different stages of the real estate cycle. Singapore is on the rise and perhaps close to the peak while Hong Kong is at the bottom of the current cycle. With the reopening of the border with the rest of the world, we expect rents in Hong Kong to recover.”
There are a myriad of reasons why rents in Singapore and Hong Kong are near parity, industry experts say. In 2019, when Hong Kong saw violent anti-government protests, an estimated US$4 billion of capital moved to Singapore from the city, according to a Bloomberg report.

Hong Kong ends reign as most expensive city for expats, Singapore gains 8 places

The outflows continued over the next three years with Hong Kong enforcing some of the strictest Covid-19 restrictions in the world, a factor which also hastened waves of emigration with both locals and expatriates relocating either temporarily or permanently.

Last year, Hong Kong’s population dropped 0.9 per cent to 7.33 million from 2021, according to government data released in February. It was the third straight year of population decline and the resultant diminished pool of tenants and homebuyers had an impact on the property market.

Meanwhile, Singapore’s stability and widely-praised management of the coronavirus pandemic further burnished its reputation as a premier business hub.

Many businesses and professionals found Hong Kong’s pandemic curbs too restrictive and relocated to Singapore, which then saw higher rental demand.

Singapore’s prudent timing in reopening its economy in late 2022 was a “catalyst” for international workers’ return to the city, and demand for rental properties was further stoked by successive hikes in stamp duty rates which made property purchases more expensive, according to Knight Frank.

For the rest of the year, home rents in both Hong Kong and Singapore are likely to face upwards pressure, although Singapore rental increases could be moderated by higher property supply in a slowing economy, according Ismail Gafoor, CEO of Singapore-listed PropNex Realty. He expects about 18,000 new units to enter the property market, nearly double the number in 2022.

Still, full-year rents are forecast to rise by 5 per cent, said Tricia Song, head of research for Singapore and Southeast Asia at CBRE.

“For private homes, rents were essentially flat for the 10 years before 2022 due to oversupply and mediocre population growth,” Song said. “With future supply likely to be below historical average, higher property taxes and higher replacement costs, rents are unlikely to fall back to pre-Covid levels.”

Other analysts expect higher rental increments in Singapore.

“We are projecting rentals to grow at a pace of 10 to 12 per cent for the whole of 2023, relatively slower in comparison to 2022 where overall residential rentals grew by nearly 30 per cent for the whole year,” said PropNex’s Gafoor.

Meanwhile, Hong Kong is expected to see sustained demand for rental properties as rising interest rates and heftier down-payment requirements make outright purchases expensive.

“The relatively large lump sum of down-payments is encouraging more young expats to opt for rental housing options,” said Rosanna Tang, executive director and head of research in Hong Kong at Cushman and Wakefield. “Given the rate hike environment coupled with uncertain global economic outlook, potential homebuyers may choose to stay on the sidelines and temporarily seek rental properties instead.”

Rents are forecast to rise by 5 per cent to 8 per cent this year, boosted by demand for housing from foreign talent and non-local students relocating to the city, Tang said.



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