Lifestyles are also changing, with more people delaying marriage or choosing to remain single, Mr Cheong said. More are also marrying foreigners and may want to buy a home in their spouse's country and rent one in Singapore.
Ms Alice Tan, head of consultancy at Knight Frank Singapore, added that the idea of injecting new home supply with more rental units also comes against a backdrop of rising property prices.
The renting model could also “promote a spirit of entrepreneurship" among those who want to invest in business instead of property. Diverse accommodation choices also make living and doing business in Singapore more attractive, she said.
SENIORS CAN BENEFIT TOO
A BTR model would also support an ageing population as seniors and empty nesters choose to downsize their properties, said Colliers' Ms Tang.
“If you don't like it, there’s (Sellers’ Stamp Duty) to consider and you got to suck it up and live in it for the next few years before you can move. However, if you rent, you can experiment. You can consider: Does it suit you?”
She added that having a single landlord may offer more security and comfort to older folks. One could also meet like-minded people in the development or those from different walks of life, with the chance of building new friendships, she said.
Ms Tang described the BTR model as “a very scalable proposition” in light of the current demand in the market.
“It offers different business possibilities, and it offers developers the potential of stable long-term income, asset management opportunities which could eventually be spun into a real estate investment trust (REIT).”
WILL DEVELOPERS BITE?
Knight Frank’s Ms Tan said there is indeed growing interest in new rental formats, including co-living, as construction delays squeeze home supply.
But while developers are keeping tabs on the trend, she does not see many exploring this as the traditional build-to-sell model is still “generally profitable in Singapore”.
The high upfront costs of land development in Singapore – including land, construction and stamp duties – means that the BTR model may not be viable. The payback period under this model is also much longer, she said.
“The business case of the BTR model must be proven in terms of longevity and sustainability from end-user demand and costs perspectives, before more private developers will undertake this in a big way.”
Savills’ Mr Cheong agreed that not all developers would be keen, with hotel or hospitality companies and private equity firms more likely to show interest.
But NMP Mr Cheng said the model is an asset class sought after by many global institutional investors, and “private global capital is ready to be tapped in this instance”.