Singapore's luxury rental market performed well last year, with landed residential rents rising by 28.1% for the year, with a total of 5,552 units for rent.
Of these, one prime house in each of the Tai Wai Park and 4th Avenue areas was the most expensive, at S$150,000 per month.
This means that tenants are paying S$1.8 million a year in rent alone, enough to buy a quality three-bedroom flat unit.
Real estate platform Edgeprop reported in June last year that a prime townhouse in Queen's Park in Esther was rented out to a wealthy Chinese national for S$200,000 a month, or S$2.4 million a year.
However, the lease was not reflected in the Urban Redevelopment Authority of Singapore's figures.
In an interview, Han Huan Mei, Head of International Real Estate Research at Leith Sotheby's, pointed out that only 18 houses with rents of at least S$50,000 in 2021 had more than doubled to over 40 last year, reflecting the strong trend in the luxury rental market.
"These luxury tenants include multinational executives, as well as wealthy foreigners who are applying for permanent residency or citizenship in Singapore. High-net-worth individuals, like some Chinese and European ones, are willing to pay high prices to rent quality townhouses, mainly to experience the unique lifestyle of such luxury properties."
In addition to luxury property owners, some real estate companies such as City Developments, Far East Organization and Ascott have also entered the luxury rental market, offering several high-end flats and townhouses for rental purposes.
City Development, for example, has a number of manned rental flat units at The Regency and Cuscaden Residences, as well as a number of quality townhouses available for rent.
A City Developments spokesperson revealed that the company's Singapore residential rental business offers more than 300 luxury units with occupancy rates currently at nearly 100 per cent, with rents starting at S$80,000 for premium townhouses and S$12,500 for three-bedroom high-end private units.
"With the reopening of countries' borders, our rental business portfolio is benefiting from solid market demand from the return of foreigners, thanks to the limited supply of quality rental units in the market."
Far East Organization currently has 1,600 private residential units for lease with an occupancy rate of over 90 per cent, with a quarter of these units renting for more than S$8,000, with luxury homes such as Orchard Scotts, Nassim Regency and Skyline @ Orchard Boulevard renting for at least S$10,000 and premium townhouses in Villa Holland renting for S$60,000.
Far East Organization's head of sales and leasing, Irene Kwok, said the company had seen an increase in luxury tenants over the past two years, with tenants mainly coming from China, India and the United States. Of these, the Chinese tenant ratio has grown from 10 per cent to 18 per cent.
"We have observed an increase in the individual leasing ratio from 78 per cent to 83 per cent from 2020 to 2022, with a corresponding decrease in corporate leasing over the same period. This may be due to delays in construction caused by the epidemic and longer completion times for public and private housing.
In addition, given the mixed working arrangements, tenants tend to rent larger units to have more privacy."
Ascott operates a number of black and white townhouses for rent on Happy Hill Road, ranging from 15,000 sq ft to 270,000 sq ft. These houses have fully-equipped kitchens and bathrooms, as well as maid's quarters, and some have outdoor swimming pools.
In an interview, Ascott's Managing Director for South East Asia, Karen Wong, said the houses were on long-term leases and were now fully let, with most tenants having leases of more than two years.
She said the company's long-term accommodation business is resilient and demand remains strong, with the momentum expected to continue into 2023, especially as the company receives more enquiries for Singapore accommodation following the lifting of some epidemic-related restrictions in China."
Turning to the outlook for the rental business for property companies, Sidney Lee, Senior Head of Research at Hedon Group, believes that the market lacks larger luxury homes for rent, and therefore property companies with larger units available for rent will benefit from this growing demand, especially from ultra-high net worth individuals.
Liu Jianping, Head of Corporate Leasing at Bona Industrial, agrees that the re-opening of China may drive the luxury rental market.
"Our sense is that many HNWIs who can afford to relocate to Singapore have already done so in the past two years. So the next growth in demand for high-end rentals from Chinese HNWIs will be gradual and not a huge spike."
According to Leith Sotheby's senior vice-president of international real estate, Desmond Dacey, this period is attracting not only luxury tenants from China, but also multinational companies who want to send more executives to Singapore.
"These companies are looking to expand their business in the ASEAN and China markets through Singapore. As a result, we can expect demand for luxury rentals to continue to increase."
