Foreign workers face bed crunch
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?
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