Singapore Residential Price Index vs Rental Index

The tightening of Employment Pass for foreigners is going to impact the rental market for residential property.

Singapore has long been the city of choice for many talents due to its vibrant business environment, efficient government, low tax rates and strong currency. Yet just when Singapore should be a magnet for global talent due to this pandemic, the barriers to entry are mounting.

Singapore is facing the worst recession in its history. Alongside the economic slowdown is the soaring unemployment. Suntec City had cut half of its manpower and Resort World Singapore had slashed more than 3,000 jobs last month.

In order to promote local hiring, Singapore had tightened the framework that governs employment pass for foreigners, increasing the minimum monthly salary from S$ 3,600 to S$ 4,500 within a short period of 4 months. The minimum salary for an employment pass holder is expected to increase to S$ 5,000 in December for the financial services sector. As for experienced workers who are elder than 40 years old, the minimum salary in order to be eligible for an employment pass is S$ 9,000.

The uncertain job prospects and stricter conditions make Singapore a less welcoming destination just as Singapore needs foreign investment the most.

We expect the rental demand for residential properties to contract more as the demand from foreigners is going to be less. Over the past few years, the rental rate in the city-state had remained stagnant despite property prices are inching higher.

Despite the gloomy outlook, we are still bullish on Singapore in the long term. Although it is losing its luster, it is still the preferred choice for South East Asia talent. If you are interested to invest in Singapore private residential market at this moment, you should look for properties located in the Core Central Region. The prices had barely moved over the past few years and the properties in this region will be the first to move upwards once the demand is back.

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