Singapore’s rising costs are driving expats to Malaysia and Vietnam | Business and Business News

Singapore – For marketing professional Benedikt Becker, living and working in Singapore has always been “the dream”.

Becker, who landed a job at a marketing agency in Singapore in 2020, benefited from the city-state’s vibrancy as a business hub, enjoying its efficiency, “impressive” skyline, lush greenery and architecture. For 2,800 Singapore dollars (US$2,072) a month, the German national rented a one-bedroom boutique condominium in eastern Singapore that allowed him daily morning strolls to the beach.

But as the cost of living continued to rise, Becker began to reconsider his situation. He noted that his Grab rides to the office cost SGD 22-25 (US$16-18), versus SGD 12-14 (US$9-10) when he arrived. Friends began reporting that their landlord increased their rent by 20 to 30 percent.

Rents in Singapore’s prime residential market rose by more than 26 percent in 2022, more than twice as fast as London, Sydney and New York, according to global property firm Savills.

In January, the city-state government increased the goods and services tax (GST) by 1 percentage point to 8 percent before planning a hike to 9 percent next year.

Last year, 33-year-old Becker decided to move to the Malaysian capital Kuala Lumpur and take a pay cut to work remotely for a German tech start-up looking to expand into Southeast Asia.

According to Becker, since the change he has “been able to save so much more”.

Due to the rising cost of living in the city-state, Benedikt Becker moved from Singapore to Malaysia last year [File: Benedikt Becker]He now rents a room in a co-living space on a flexible lease for S$800 (US$592) a month, orders GrabFood for most meals for about 30 Malaysian ringgit (US$6.55) and works in various co-working spaces.

“There’s a saying, if you don’t like the rules, you have to change the game…so moving from Singapore to Malaysia was my way of changing the game to keep the cost of living down,” Becker told Al Jazeera.

For Becker, in addition to saving money, the main thing is to get to know other Asian cities like Bangkok or Ho Chi Minh City.

Becker is among a group of expats who have left Singapore for cheaper Southeast Asian cities, buoyed by sharp increases in rents and the cost of living as the economy recovers from the COVID-19 pandemic.

While there is no official data on the number of foreign workers leaving Singapore, recruitment agencies say multinationals are increasingly looking to relocate staff out of the city to cut costs.

Due to the location, English-speaking population, lower cost of living and heavy presence of back-end office functions, there is a “strong appetite” to move employees from Singapore to neighboring Malaysia, Nic Chambers, the managing director of Michael Page Malaysia, said Al Jazeera.

“Singapore still plays a really important role. CFOs and CEOs of public companies will want to remain in Singapore due to its proximity to investors, private equity firms and venture capital firms. However, I anticipate that over time we will move even some of these C-suite positions to Malaysia,” Chambers said, adding that he has also seen an increase in talent applying for US dollar pay packages, to mitigate fluctuations in the value of ringgit.

Some expats are leaving Singapore to take advantage of the lower cost of living in Kuala Lumpur [File: Lim Huey Teng/Reuters]The American software developer Will Fong also felt the effects of rising rents in Singapore.

Fong had rented a one-bedroom apartment in western Singapore’s Jurong East for S$2,600 (US$1,924) when his landlord suggested the rent be increased to S$3,500 (US$2,591). With the help of his realtor, he managed to negotiate the rent down to S$3,000 (US$2,220).

“I’ve heard how crazy things are getting… It would be way too expensive if I agreed to that rental price,” Fong, 41, told Al Jazeera.

Fong decided to work remotely in Vietnam, traveling first to Ho Chi Minh City for two weeks and then to Da Nang for a month. In the long term, Fong plans to rent a room in Singapore to use as a base for traveling and working remotely in Southeast Asia.

“I can have both places and it will still be cheaper than going out in Singapore and eating there,” said Fong, who is a permanent resident of Singapore.

“I’m pretty reserved… I just need a place to sit and have my beer, get my work done from anywhere and it’s a lot more relaxed. Right now I’m playing outside of Singapore for a while… It’s like going camping,” he said.

Southeast Asian cities like Ho Chi Minh City are attracting long-distance workers due to their low cost of living [File: Hoang Dion Nam/AFP]While expats are leaving Singapore due to high rental and living costs, this is “offset by a large number of expats from other regions and a shift towards senior-level expats using the new Overseas Networks & Expertise (ONE) pass”. — a visa that allows eligible talent to work for multiple companies at once — according to recruitment firm TENTEN Partners.

Operating out of London, Singapore and Hong Kong and soon to open in Dubai, TENTEN Partners’ clients range from mid- to senior-level professionals in financial services, fintech and consulting firms.

“Western candidates look for work in countries with low tax rates and a higher quality of life. Singapore is still attractive due to its infrastructure, low taxes and family-friendly environment,” Luke Archer, managing partner and co-founder of TENTEN Partners, told Al Jazeera.

“But the salaries of B-level executives are often not high enough to convince candidates to switch. Instead, we place more expats in the Middle East. Hong Kong is still a tough sell for candidates, Singapore remains a more attractive option.”

Those living on the fringes of society may feel more like they are being squeezed out by Singapore’s rental market and would reconsider moving here to work, said Sumit Agarwal, an economics professor at the National University of Singapore specializing in finance, real estate and economics.

But while there is some level of out-migration, the influx of expats is comparatively greater as Singapore is still considered a “safe haven,” Agarwal told Al Jazeera.

According to the INSEAD Global Competitiveness Index 2022, Singapore ranks first in Asia for attracting and developing talent and retains its place as the most livable location for expatriates from East Asia in the ECA International 2023 Location Ratings Survey.

Singapore’s Economic Development Board expects rental prices in the city to fall in the coming months [File: Tim Chong/Reuters]Singapore’s government has downplayed indications that the city-state’s status as a magnet for talent from around the world may be in jeopardy, stressing that imbalances in the rental market caused by COVID-19 have gradually eased.

“Rent increases in 2022 reflected an exceptional supply tightness driven by severe COVID-19 disruptions in the construction industry as well as strong demand from expats and locals,” according to the Ministry of National Development (MND) and Economic Development Board (EDB). ) said in a joint statement.

“During the pandemic rental demand increased as locals rented while waiting for their property to be completed. With the easing of border restrictions last year, rental demand from foreigners also recovered quickly, putting further pressure on the rental market.”

MND and EDB expect rental pressure to ease in the coming quarters as a high supply of residential units is expected to be built this year and in the years to come.

Around 40,000 apartments in the public and private housing market are expected to be completed this year, the government said – the highest number in five years. The government also assumes that between 2023 and 2025 almost 100,000 public and private residential properties will come onto the market.

“We continue to attract significant investment from companies, founders and investors seeking a stable base to capitalize on Asia’s growth and create new products and services for the world and jobs for Singaporeans,” said MND and EDB.

Although Becker is happy with his move, he misses some things about Singapore and returns to the city every two to three months for business reasons.

“I miss Singapore’s vibrant startup and business scene, where I can connect with founders and marketers at many networking events,” he said.

“Singapore has a lot more to offer than Kuala Lumpur in that regard.”