Expats moving to cheaper areas as prime rents soar
Surge in moves leads to boom for movers, executive relocation firms
By Erica Tay
BUSINESS is booming for moving companies in Singapore as soaring rents force expat families to bail out of pricey areas in favour of cheaper outlying suburbs.
Demand is so great that some executive relocation firms are reporting a 15 to 25 per cent increase in charges and double the volume of business from last year.
The expat outflow has been most notable in blue-chip districts such as Holland Road, Bukit Timah and Tanglin, where rents have gone through the roof.
Average flat rents in districts 9, 10 and 11 - which include the upscale Orchard/Cairnhill, Tanglin/Holland Road and Newton/Bukit Timah enclaves - have rocketed by 36 per cent in a year, said real estate consultancy Savills Singapore.
Renting a unit at the posh Ardmore Park condominium now costs $17,000 to $19,000 a month, for example.
Rental increases started biting in March, sparking a house-hopping surge that has swamped moving companies serving the corporate accounts of multinational corporations (MNCs).
One company reported that the volume of moves has doubled from a year ago.
Asian Tigers K.C.Dat, which specialises in relocating executives of MNCs, is finding it hard to cope with the growth in business.
‘The volume of local moves is double what we handled last year, and this is after we turned away an equal volume because demand was just too high,’ said group general manager John Lim.
Most of those moving are ‘high-end executives, with rental budgets of $8,000 to $15,000 a month’, he added.
Another relocation specialist, UniGroup Worldwide UTS Singapore, said its volume of local moves began to surge in March, when it was 35 per cent higher than the same time last year.
By June, UniGroup’s monthly volumes of local moves were up 86 per cent year-on-year.
‘Nearly 80 per cent of the increase in local moves can be attributed to expatriates moving from districts 9, 10, and 11 to outlying areas such as Upper Bukit Timah, Ang Mo Kio or locations along the East Coast,’ said the company.
As well, Crown Worldwide has enjoyed a 30 to 35 per cent increase in the number of local moves for expat families.
Its general manager for household goods, Mr William Lee, said: ‘We have seen several cases where people moved because they couldn’t afford to live at the same place any more.’
The expat musical chairs occurs mostly at the end of the month, when residential leases usually end.
Expats are being caught in a classic supply-demand squeeze. Singapore’s recent rush of collective sales - where entire condominiums are bought by developers to be torn down and redeveloped - is slashing the supply of rental flats in choice districts, while the booming economy is drawing in more expats and so pushing up housing demand.
‘Low vacancy levels, coupled with strong demand from overseas staff as well as from tenants and owners displaced by collective sales, are expected to translate into rising rents over the short to medium term,’ said Mr Simon Hill, regional director of residential leasing at Savills.
‘We note that there is little room for negotiation on asking rents,’ he added.
The trend looks unlikely to ease soon, with Savills predicting a 15 to 20 per cent increase in luxury home rents over the rest of the year, ‘while rents in fringe/ suburban areas will follow suit, benefiting from the spillover demand’.
‘We are also likely to see a growing number of expatriates choosing to buy rather than rent.’
Source : Straits Times - 27 Jul 2007
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