Singapore Worker Housing Rents Rose 10.8% in H2 2024 on Labour Influx

Blackstone’s Avery Lodge portfolio has become a target for Bain Capital (Image: Google Maps)

Rents in worker housing across Singapore rose by an average of 10.8 percent in the second half of 2024, as an influx of foreign labourers flooded into Singapore’s limited stock of dormitories, a recent analysis shows.

In June 2024 442,900 foreign labourers were employed in the construction, shipyard, and industrial chemical processing industries in Singapore, per government statistics, while the city-state had a stock of 439,198 beds in worker dormitories at the end of the year, according to a report by industry group the Dormitory Association of Singapore and Knight Frank.

With an upswing in large scale construction projects expected to bring in a wave of foreign workers, at the same time that some dormitories are being closed for regulatory-driven upgrades, the authors of the report predict that, while not matching 2024 growth rates, rents should increase by 5 to 8 percent and capital values for worker housing should also continue to rise in 2025.

The report noted that, “…these foreign worker dormitories can generate high yields for the owners, as the high demand for places to house foreign workers presently exceeds the limited supply of dormitories.” The authors added that, “rents and prices of PBDs (purpose-built dormitories) are expected to stay elevated for a longer period of time.”

Rising Investor Interest

Centurion group CEO Kong Chee Min

While investments in foreign worker dormitories remained limited in 2024, according to the report, more investors are seen seeking to capitalise on rising bed rents and tight supply during the year.

In December 2024, Singapore’s Centurion Corp began operations at its tenth worker dormitory in the country, Westlite Ubi, adding 1,650 beds to its portfolio.

“Investor interest in the purpose-built worker accommodation asset class has been rising due to its attractive demand-supply dynamics. Initially overlooked, the sector gained recognition following the post-COVID construction boom, which underscored the need for quality worker housing,” Centurion CEO Kong Chee Min told Mingtiandi in a statement.

Centurion’s latest opening came after Schroders Real Estate in June sold a worker dormitory near Paya Lebar to local developer BBR Holdings for S$63.5 million, according to MSCI data cited in the report.

Bain Capital is also closing in on a purchase of the S$750 million Avery Lodge worker dormitory portfolio from Blackstone, according to a Bloomberg report in November.

Occupancy in worker dorms reached 96.7 percent in the second half of 2024, according to the report, which covered worker housing facilities of over a thousand beds.

Worker housing facilities outside the central region were nearly fully occupied while occupancy in the central zone dropped from 98.1 percent in the first half of 2024 to 93 percent in the second half. 1,000-bed or larger facilities accounted for 63 percent of the Singapore market in 2024, the report said.

Policy Influence
Averaging $460 per bed per month nationwide, rental rates at worker housing facilities ranged from S$390 per bed per month in western Singapore to S$510 per bed per month in the central region, in the second half of 2024, according to the report.

“With Singapore’s increasing infrastructure projects, factory production and other labour-intensive requirements, more foreign workers are expected to be brought in to support these requirements. As such, bed rents are expected to continue on the path of increase,” the authors of the report said.

The market is also feeling the impact of post-pandemic regulations introduced in October 2023 which control population density within working dormitories. The new rules are forcing some operators to close facilities for upgrades, adding to a shortage in the market, the report said.