Investing in property can be both satisfying and lucrative as you can generate rental income, enjoy greater retirement security and diversify your investment portfolio. Data shows that there has been an increase in foreign interest in private properties post-pandemic, as Singapore has gradually opened up vaccinated travel lanes.
Our latest Ohmyhome Insights showed that the number of purchases by foreigners for private new home sales grew from 4.6% in September to 6.9% in October 2021. They were concentrated in the central area, specifically in Bukit Timah, Queenstown, and River Valley.
How does Singapore’s rental rate compare with other cities?
With a relatively low tax rate and strong government support for investments in technology, Singapore is an attractive hub that is well connected around the world. With more than 30,000 international companies located in Singapore, it’s not surprising to find a strong rental market buoyed by foreigners who work here.
Here’s how Singapore’s robust rental industry compares to other major cities around the world. Singapore is ranked 4th globally, behind New York, Abu Dhabi, and Hong Kong.
The lowest and highest median rents in Singapore
Among all the 28 districts within Singapore, (except for District 24 with no recorded data), District 26 had the lowest median rental at $2.16 per square foot (psf), while District 6 had the highest at $6.96 psf.
District 6 is ideally located along High Street and also includes part of Beach Road. It is an incredibly short drive away from the CBD and the renowned Orchard Road shopping area is at the backdoor. This allows residents in the area to shuttle quickly between work and play.
High Street was a colonial streets built by the British, and is one of the oldest streets that is still around today. There you can find many national landmarks marked for conservation, and have been repurposed for modern use, such as the present-day Arts House and National Gallery.
In contrast, District 26 (comprising Lentor, Mandai, and Springleaf) is located in the northern part of the island. It is much further away from the city, though it is home to the popular Bishan park and Kong Meng San Phor Kark See Temple. The lower levels of accessibility and amenities had likely contributed to its low median rental rate.
The rest of the more popular districts such as 1, 9, 10, 11 and 15 came in at $4.94, $4.24, $3.48, $3.53 and $3.08 psf respectively. Although lower than District 6, these median rents are still higher than most other districts – an indication of the attractiveness of those areas.
The lowest and highest average rents in Singapore
The table below illustrates the total number and aggregate value of rental contracts between January to November 2021.
Based on the findings, average rental starts from $2,403 in District 17 while the highest recorded was $6,883 in District 4. Again, this figure cements the notion that there is a higher demand for properties nearer to the city.
All recorded rentals for private properties in Singapore (Jan to Nov 2021)
|Area||No. of Rentals (A)||Total Rental Value (B) $||Average Rental (B/A) $|
|D24||No record||No record||No record|
The current median rental yield in Singapore?
So far, we have looked at the median rent and average rent. Although we can use this as a reference when renting out a property, the figure hardly tells us the real returns of that property. This is because properties vary in all shapes and sizes, and doesn’t take into account the price at which the property was purchased.
To calculate a property’s estimated rental returns, we will find out the median rental yield, which is expressed as a percentage of the annualized rent over the property’s transacted price:
Annualized median rent / property median transacted price x 100 = median rental yield
However, the results showed a contrast to the figures in average and median rents, this could be due to the fact that the lower transaction prices in these areas have resulted in higher rental returns for properties in more outlying areas.
For example, District 6 had the highest average rental value, and its yield is still impressive (2.89%), but is now no longer at the top of the heap. That distinction falls to District 22 with a yield of 3.68%. The Boon Lay and Jurong estates in District 22 have lower property transaction price, which likely lead to a high yield.
How can I maximise my rental yield?
We would suggest you maximise the rental of your property by reviewing your rent regularly with surrounding properties, securing long-term tenants and avoiding empty periods. However, if you need a bit of customized advice on your property, our Ohmyhome’s super agents would be more than happy to chat with you.
You can reach out to us at 6886 9009 or WhatsApp us at +65 9727 5270! You can also message us on Intercom, which can be found at the bottom, right-hand corner of the screen.
Frequently asked questions
1. What is the median rental yield?
It is a measure of the return a property investor or landlord is likely to receive on a property through rent.
2. How do you calculate the gross median rental yield?
You can calculate this by using the annual rental income on a property and dividing it by the total amount invested into the property and multiplying this figure by 100.
Annualized median rent / Property transacted price x 100 = Median rental yield
3. Why does the rental yield matter?
It is an indicator of the return on investment (ROI), which can be used to track the performance of the property compared to its peers.
4. What does the gross median rental yield include or does not include?
It is an indicator of the expected incoming cash flow for a property, however, it doesn’t factor in all other additional payments of buying and renting a property. The net rental yield is used to calculate the actual return on investment of buying a property for rental income.
5. What is a good median rental yield?
This varies from location and the demand and supply of your property. In our experience, a good rental yield for an investment property is anything over 2.5%.