For­eign work­ers face bed crunch

Singapore Business Review - - CONTENTS -

Sub­di­vid­ing apart­ments into small sub­lets has been a main­stay of the cheaper end of the hous­ing mar­ket in Sin­ga­pore, but has drawn the ire of neigh­bours who are faced with a lot of peo­ple crammed next door. To al­le­vi­ate over­crowd­ing in apart­ments, the Ur­ban Re­de­vel­op­ment Au­thor­ity (URA) de­cided to re­duce the max­i­mum oc­cu­pancy in pri­vate dwellings from eight to six un­re­lated peo­ple ef­fec­tive May 15. Apart from re­duc­ing the de­mand for bunk beds in Sin­ga­pore, will this have an ef­fect on rents and how hard will it be to en­force?

Avoid­ing nano-apart­ments

Rental vol­ume in April 2017 was 15.8% lower than 4,336 units rented in April 2016. This could be due to land­lords sublet­ting in­di­vid­ual rooms within their units in­stead of rent­ing out whole units. “Some of them have in­stalled in­ter­nal par­ti­tion­ing to cre­ate more rooms. There could be in­stances whereby a 3-bed­room apart­ment could evolve into a 6-8 bed­room apart­ment,” says Eu­gene Lim, ERA Realty Net­work’s key ex­ec­u­tive of­fi­cer.

JLL Sin­ga­pore head of res­i­den­tial leas­ing Ju­liann Teo reck­ons this move by the gov­ern­ment is to en­sure that the play­ers do not churn out nanoa­part­ments as they do in uber-ex­pen­sive Hong Kong. “Over the years, the size of res­i­den­tial prop­er­ties is trend­ing smaller. The slash on oc­cu­pancy cap is likely to en­sure that over­crowd­ing and its as­so­ci­ated haz­ards do not be­come a norm,” Teo ex­plains, not­ing that this will also spur take up for smaller stu­dio unit-types and one-bed­room apart­ments. Teo added de­mand for pri­vate prop­er­ties may likely see an in­crease and could per­haps up­lift rents, given that from a math­e­mat­i­cal per­spec­tive, those hous­ing units with eight oc­cu­pants would have to dis­place two to keep up with the limit.

Prop­nex Realty CEO Is­mail Gafoor notes that the re­cently-im­posed cap of six is a rea­son­able num­ber, tak­ing into con­sid­er­a­tion the smaller sizes of con­do­mini­ums in re­cent years. He says pri­vate prop­er­ties are meant to be ex­clu­sive, and the oc­cu­pancy cap will help main­tain this ex­clu­siv­ity.

Polic­ing the pol­icy changes may prove chal­leng­ing, but the squeeze on land­lords has be­gun and for ten­ants they will get to en­joy more space.

Pri­vate res­i­den­tial prop­erty rental in­dex, break­down by re­gion

Ju­liann Teo

Eu­gene lim

Is­mail Gafoor

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