Investors target Singapore’s mid-term rental gap

Co-living has fewer than 10,000 rooms despite a sizeable international workforce.

Singapore’s rental market has limited options for tenants staying three to 24 months, creating an opening for investors targeting stays longer than hotels but shorter than conventional residential leases.

“Singapore's private residential leases carry a minimum stay of three months, HDB flats require six, and short-term rental platforms are effectively barred,” Maureen Li, CEO at ABIEL Property Investment Fund, said in an emailed reply to questions.

Li said the rules defined the gap but did not create demand. “That’s precisely why no existing product was ever designed for the three-to-24-month resident,” she pointed out.

Emily Fell, senior director for living sectors in the Asia-Pacific capital markets at Savills Plc, said Singapore’s co-living sector, one of the few formats serving this length of stay, has fewer than 10,000 rooms.

Government data cited by Li showed Singapore citizens accounted for just 15% of tenants in private residential leases in 2018 and 2019, indicating the importance of foreign renters to the market.

Returns in the segment have also outpaced conventional residential property, according to research commissioned by ABIEL.

“Individual Singapore shophouses compounded at roughly 15% a year in capital value over 30 years, versus about 2.28% a year for residential condominiums over the same timeframe,” Li said.

ABIEL began acquiring properties in Geylang when institutional investors had limited exposure to the segment. Interest from professional and institutional investors has since increased.

Fell said large transactions involving extended-stay portfolios or purpose-built developments would provide stronger evidence of institutionalisation.

“Today, most of the market remains fragmented and operator-led,” she said via Zoom.

The sector will mature when institutions begin competing consistently for these assets, rather than treating them as exceptions, she added.