Found this article from TODAY newspaper interesting. In the short article, it brings up a few points.
Point 1: Number of international students has increased 25% over the last 4 years.
Significance: Increase in international students = increase in expat families. Singapore remains an attractive location for companies. Additionally, the expats coming over should be relatively high-level for the companies to relocate the entire family. Since companies are unlikely to purchase real estate simply to house their expats, this should continue provide support for the rental market.
Point 2: Expat allowances are shrinking.
Significance: Faced with shrinking allowances, expats have some choices to make in terms of housing. Big vs small, location, old vs new etc. The disproportionate increase in non-landed rental (7%) vs landed rental (2%) leads to the conclusion that expats formerly considering landed rentals have downgraded to non-landed. By extension, it is conceivable that higher-value non-landed rentals have also shifted downwards. This ties into our previous view that expats are increasingly being “localized” and are losing their expat allowances, leading to fewer corporate leases and lower budget for rentals.
Point 3: Expats are shifting closer to where their kids study.
Significance: With smaller allowances, many expats are not given cars or transport allowances. For the sake of their children, expats are increasingly staying closer to the international schools where the children are studying. This may present opportunities for the property investor looking to cash into the trend.
How to play the trend?
1. Check out the list of international schools in Singapore here. Determine the area and profiles of the expat families you want to target.
2. Once you’ve found your target location, look for developments with bigger units and child-friendly facilities. Since they have children, you should be looking for relatively big units with 3 or 4 bedrooms. Preferably look for nicer or newer developments as expats moving from more prime areas will be used to a certain level of quality. Also look out for properties with good transport links as the parents will still need to get to work.
This post should not be construed as a exhortation or solicitation to buy a property for rental to expat families. Rather, it is intended as a reminder of what to look out for if you intend to do so.