Singapore and New York are the most expensive cities in the world for Year 2022.

The latest Q3 and Q4 2022 Prime Global Rental Index statistics issued by Knight Frank indicate that Singapore is currently at the forefront of luxury residential rent growth.

The index looks exclusively at the prime property, which Knight Frank defines as “the most desirable and expensive property in a given location across 10 cities, generally defined as the top 5% of each market by value".

In this article, we will explore the trends in luxury property rents in Singapore and examine the factors driving demand in this Lion city.

Notable Surge in Prime Residential Rent in Singapore

Bloomberg News on 16 March 2023 revealed that Singapore is now leading the way in terms of prime residential rent growth, surpassing even New York.

The growth in prime residential rent in Singapore has been particularly significant, with a 23% rise in Q3 2022 and 28% in Q4 2022.

Factors Contributing to Singapore's Prime Residential Rent Growth

The surge in prime residential rental prices in Singapore has been attributed to a combination of factors.

First, there is a supply crunch due to construction delays of new homes in 2020 and 2021. Second, strong demand has driven prices up. Additionally, the opening of borders post Covid and the introduction of new visas to attract top talent have also contributed to an uptick in demand.

The new five-year visa program, launched in January 2023, targets high-earning professionals with a minimum income of S$30,000 per month and these professionals are the ones seeking luxury rentals in Singapore. Popular rental areas for these professionals include the Botanic Gardens cluster, Tanglin and River Valley.

Moreover, the inclusion of spouses in this visa program, along with the 30% additional buyer's stamp duty (ABSD) for foreigners, serves as a driving force for foreigners to opt for renting instead of buying properties in Singapore.

By renting, they can relish in the luxurious lifestyle that comes with high-end properties, without incurring additional costs associated with property ownership.

Sales of Good Class Bungalows (GCBs) slows in 2022

In contrast, the sales momentum of Good Class Bungalows (GCBs) slowed in 2022 due to the turn of the global economic climate and prolonged uncertainties from geopolitical issues. The surge in GCB prices in 2021 has prompted some sellers to increase their asking prices, potentially deterring the sales of GCBs in 2022.

For instance, Cuscaden Peak Investments has put three freehold bungalows in Nassim Road on the market with an asking price of S$5,200 psf. It is important to note that this slow-down in GCB sales is only temporary because GCB buyers have ample liquidity, and the majority of them are locals and newly naturalised citizens who are looking to own valuable properties like GCBs for their own use.

Rental Market for Bungalows in GCB Areas

In the past two years, the rental market for bungalows in GCB areas has been making headlines.

About 40 bungalows were leased at monthly rentals of S$50,000 and above in 2022, compared to only 18 in 2021. The tenants include top management of multinational corporations and well-heeled foreigners who are applying for Singapore permanent residency or citizenship and setting up family offices.

Some Chinese and Europeans are also willing to pay a premium to rent a GCB just to experience the lifestyle it offers, while some individuals have transitioned from penthouses to larger homes due to the impact of the Covid-19 pandemic.

Singapore's Most Expensive Residential Clusters in 2022: Prime District 9, 10 and 11

In District 9, the highest rent was a 4-bedrooms condo unit at The Marq On Paterson Hill rented out at S$100,000 per month. 

In District 10, the highest rent was a 4-bedrooms condo unit at Cliveden At Grange rented out at S$20,000 per month.

In District 11, the highest rent was a 5-bedrooms condo unit at Buckley Classique rented out at S$22,000 per month.

Strengthening Position as a Global Wealth Hub

Singapore has made significant investments in strengthening its position as a global wealth hub, particularly through tax perks that incentivize the establishment of family offices. The rising number of wealthy individuals is fueling upward pressure on prime rental prices.

In conclusion, Singapore's luxury property rental market is experiencing significant growth, particularly in prime residential rents. It will be interesting to see how these trends develop in the coming months and years, and whether other cities around the world will follow Singapore's lead in luxury property rent growth.