Singapore homes to see firm rents, more leasing deals when border with Malaysia reopens further

SINGAPORE'S residential leasing market is not likely to see a major impact when the land border with Malaysia reopens further, although the increase in arrivals and departures could boost the volume of rental transactions, property analysts said.

While residential properties in areas like Yishun and Jurong could enjoy higher rental demand, some Malaysians will also vacate rental housing in the city-state when their leases come to an end.

From Apr 1, fully vaccinated people travelling between Singapore and Malaysia by land will be allowed to enter either country without needing to take a Covid-19 test or quarantine. They may cross the borders via private vehicles, such as cars and motorcycles, in addition to designated vaccinated travel bus services.

Singapore and Malaysia are also progressively restoring other modes of transport, including cross-border public bus services.

For now, tenants will still have to ride out their existing rental contracts, but many Malaysian tenants may not renew their leases upon expiry, PropNex's head of research and content Wong Siew Ying pointed out.

She added: "Based on feedback from property agents, most of their Malaysian clients who are working in Singapore tend to lease HDB (Housing Board) flats, but even so, they still account for a small portion of overall leasing demand. Therefore, their potential exit is not expected to impact the rental market significantly."

With supply remaining tight for both the HDB and private residential rental markets, rents should remain firm and could even potentially climb further, she reckons.

Christine Sun, senior vice-president of research and analytics at OrangeTee & Tie, said more Malaysians, especially work pass holders, will head to Singapore.

This may drive rental demand higher, more so in areas near the Causeway, the northern part of Singapore such as Yishun, Sembawang and Woodlands, as well as the western areas like Jurong, she added. Many of these Malaysians are likely to rent HDB flats or mass-market condominiums.

"We anticipate that increased demand from Malaysian workers may push Singapore rents up further in the future," Sun noted.

"However, with Malaysians able to travel back and forth the 2 countries daily with ease, some of them may in fact give up their rental units in Singapore," she said.

Similarly, Huttons Asia's senior director of research Lee Sze Teck thinks that Malaysian workers may opt not to extend their lease now that the travel curbs are being eased, while some tenants will also give up their rental units as completed homes are delivered to homebuyers. During the pandemic, construction woes had led to a delay in the completion of new residential developments.

Lee went on to add: "On the flip side, the opening of borders will make it easier for companies to bring in foreigners to work here, giving a boost to demand. The cooling measures in December 2021 may see more existing owners selling their homes and then renting while they wait for the completion of the new home. Some tenants may rent while waiting for the interest-rate situation to stabilise."

Taken together, Huttons projects that up to 5 per cent of HDB flat leases may not be renewed this year, which could in turn help moderate the growth in HDB rents.

Lee Nai Jia, deputy director at the Institute of Real Estate and Urban Studies, told The Business Times: "We are likely to see the movements of 2 groups: those heading back to Malaysia and probably not returning to Singapore for a while, and another group that will be coming over to Singapore to work, given the opportunities available here and the favourable exchange rate."

Overall, Dr Lee foresees a slight net gain in rental demand for housing across different property types.

However, he flagged that such an uptick in demand may not be sufficient to offset the downward pressure on rents when upcoming projects - particularly the mega residential developments in suburban districts - are completed and add to the rental market supply.

ERA Realty's head of research and consultancy, Nicholas Mak, said some Malaysians, such as students who have graduated, will be returning to Malaysia for good.

But those who are in the midst of their leases here are unlikely to give up their accommodation prematurely, as they may suffer a financial penalty or be required to find a replacement tenant, he pointed out.

"There are also Malaysians who have been waiting for some time to work, study or live in Singapore. These new arrivals will add to the residential leasing demand here," Mak added.

The easing of border restrictions will therefore lead to a surge in two-way traffic between the countries. In turn, the volume of property leasing transactions in Singapore will grow, supported by the new arrivals as well as some foreigners vacating their rental homes, he noted.

That said, not every Malaysian crossing the border are leaving Singapore permanently, as they could simply be visiting family and friends. "These individuals will keep their rental homes in Singapore, and hence the rental demand here may not decline (on balance)," Mak added.

Singapore's shrinking rental stock and lack of new home supply have helped boost rents over the past year. The latest flash estimates by SRX and 99.co showed condominium rents rising for the 14th straight month in February, with a 1.4 per cent jump from January, while rents of HDB flats continued their uptrend for the 20th consecutive month, increasing 1.7 per cent.

Mak highlighted that the impending rise in rental transactions and enquiries could give rise to more scams in the real estate market. "Some criminals will see the arrival of more foreigners and greater competition for rental units as opportunities to scam prospective tenants," he added.

Lately, scammers have been targeting potential home renters by impersonating property agents and soliciting deposits even before any viewing is conducted.

READ MORE:

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• Continued strength ahead in HDB, private housing rental markets
• Singapore-Malaysia land travel: No test, quarantine for the vaccinated from Apr 1
• Vaccinated travellers to enter Singapore quarantine-free without need for VTLs from April
• Condo and HDB rents continue to climb, both rising over 1% in February