SINGAPORE (BLOOMBERG) – Singapore expats are often envied for their generous pay packets but facing the prospect of salary cuts as the coronavirus batters businesses, some are tightening their belts and asking for lower rent.
Clarence Foo, a real estate agent at APAC Realty unit ERA, has come across seven such cases over the past month – the highest number of requests he’s received during his seven-year career. Four were successful.
One was an American woman who texted Foo last week. In her message, she said she had just been informed of a 20 per cent drop in pay effective from May 1 until July 31, after which her employer will reassess the company’s financial health.
The executive, in her 30s, is leasing a one-bedroom apartment at Tanjong Pagar, near Singapore’s financial district, for $3,400 a month. She was granted a rent reduction of $250 a month, or around 7 per cent.
“At first glance, it isn’t a lot. But over three months, the duration of her pay cut, it’s a substantial saving,” Foo said.
Singapore is expected to sink into a deep recession this year as it extends a partial lockdown, now into its fifth week. Wages will take a bigger hit than jobs as businesses try to cut costs in an economy bracing for a sharp contraction, the central bank said last month.
While the government has unveiled a range of support measures, most are aimed at Singapore citizens. More than $7 billion was paid out to employers in April to co-fund the wages of over 1.9 million local workers, Manpower Minister Josephine Teo said earlier this week. Some levy waivers and rebates have also been provided to help firms meet their obligations to foreign employees.
The city-state has one of the world’s most expensive property markets. Residential rents surged to a three-year high last year, with prices boosted by strong overseas demand.
In Singapore, the rental market is typically dominated by people from overseas. There’s very high local home ownership and around 80 per cent of Singaporeans reside not in private condominiums but in housing development board flats.
Lester Chen is another real estate agent who is dealing with rent reduction requests from expats. One, living in an apartment in Sentosa Cove, a residential area on an island off Singapore’s south coast, managed to get his rent lowered by 20 per cent.
Some landlords hold out because the types of apartments they own are in short supply or because that rental income goes toward paying their own mortgage.
For those who do acquiesce, they’re often “willing to close one eye because at least they get some income instead of ending up empty handed,” Chen, from Singapore Realtors Inc, said.
Not always, though.
Last month, a British man asked for a reduction of 50 per cent on his two-bedroom inner city apartment, which costs $8,000 a month.
“The landlord was shocked,” Chen said. “There’s no way he’s going to accept such a steep cut.”
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