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Tech@SG pilot spurs hopes of demand spike for home rentals

04 Sep, 2019

SINGAPORE'S plans to expand its pool of foreign tech talent under a new scheme may help to boost the private home rental market here, property consultants said.

"Based on what we've seen, there have already been more and more highly skilled expats moving to Singapore from the first quarter of this year. Some of them are regional directors or CEOs," Christine Sun, head of research and consultancy at OrangeTee said.

"There seems to be interest in luxury homes, with many of them coming from sectors like banking, finance, tech and fintech. "With this announcement, we foresee this will help the market further," she added.

Under the Tech@SG pilot, which will be rolled out in Q4 2019, qualifying high-growth technology firms will have the Employment Pass applications of "core team members" facilitated to help them get the talent needed to set up new teams here. On Monday, Minister for Trade and Industry Chan Chun Sing revealed in Parliament the requirements needed for companies to qualify for the scheme.

PropNex executive chairman and chief executive Ismail Gafoor said Singapore's residential market will benefit from having more highly skilled foreigners as most of these expatriates tend to receive a good housing allowance on top of a good salary package.

"Most of these people will have to find a place to stay. The higher level executives who come in with their families usually get a housing allowance, and a bigger apartment will then be in demand. If they come individually, what we may see is a bigger demand for studio apartments and smaller flats," Mr Ismail said.

Nicholas Mak, head of research at ERA Realty, said the demand for rental property could be spread across the island as most tech firms are located in the city fringes or in business parks rather than in the core central region. This means rental housing near the business parks in Jurong and Changi could benefit.

According to data from the Urban Redevelopment Authority, rentals of private properties rose 1.3 % in Q2 2019, compared with the 1 % increase in the previous quarter.

"There's been some pressure on rents already, and if at least 1,000 of them come, this may shift the bargaining power over to the landlord," said Lee Sze Teck, head of research at Huttons Asia. However, other property consultants pointed out that any sizeable boost in rental for private homes would first hinge on how big this group of highly skilled professionals is.

"It's good new demand in any case, but whether it's enough to move the needle remains to be seen," Karamjit Singh, senior consultant at JLL, said.

Desmond Sim, head of research for Singapore and South-east Asia at CBRE, said: "From a supply standpoint, Singapore has a lot of vacant units, so the new demand will basically help shore up the vacancies.

"Rental has gone up, but we don't expect it to continually go up because the completion of more unoccupied units will put pressure to it." Externalities like the uncertain economic outlook could also throw a spanner in the works. "Whether tech companies are going to continue hiring at the same pace is also another question to be asked," Mr Lee said.

But Ms Sun believes the economic uncertainty is precisely what may spur companies to shift their key operations and personnel to Singapore. "One example is Dyson. We may probably see a bit more of that because if you compare Singapore with other regions, we're still one of the more stable economies."

Adapted From The Business Times, Sept 4 2019