Friday 12 May 2023

The Property Market: Expecting More Foreigners to Come to Singapore and Rent?

 Looking at the unit sizes of the new launch private apartments in Singapore (they are small!). There are a few observable trends:

(i) Units of the same type 2 Bedroom variant vs HDB BTO 3 room flat are much smaller than the current HDB BTO's size, which has also shrunk over the years

(ii) Most of the new launches compositon are 1 or 2 bedroom units, just look at the latest condo launch, The Reserve, which will be launched soon

(iii) Most units snapped up are the smaller flats such as 1 Bedroom or 2 Bedrooms units which are not ideal for families or family formation

What Message Agents are Driving

Most showflats will not tell you how wonderful living in it is; the marketting is the yield you can get by renting out the small units to foreigners. And these units are also the ones to be sold out first. Don't trust me just read the news releases for new condos from our trusted website of Channelnewsasia!

The Implicit Message

What agents and others are telling is to buy these small property units quickly. Because more and more foreigners are coming to Singapore to work and need a place to rent. They will buy the smaller units as the rental are cheaper. The rental demand for small units is assured. Seems like this is the message being driven to the locals who are buying for yields. Few years back, there was a shoebox unit craze which was 'hot' under the premise of more foreigners coming to Singapore and was a source of rental demand (Oxley holdings benefitted from it tremendously as they were the first few to ride on this craze); before the building of such units were eventually banned

I wonder how true is this? Will the government come out to say they are not increasing the foreigner tap?

Otherwise, this implicit message will be kept drumming: Singapore is taking in more foreigners, buy the smaller flats because the yield is higher and caters to the foreign sojourns who work here earn their bucket of gold and return to their homeland.

Seems like the private market knows about the future Singapore is heading to.

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