People walking at Jewel Changi Airport. The latest changes may influence the hiring of foreigners. (Photo: Unsplash)
Singapore's decision to raise qualifying salaries for Employment Pass (EP) and S Pass holders, as announced in Budget 2026, could weigh on demand for rental housing from foreign workers and increase operating costs for businesses, industry watchers say.
The updates to Singapore’s foreign workforce policies are intended to maintain the quality of EP holders as local wages rise, and strengthen support for lower-wage workers.
The aim is to keep the country open to skills and expertise from foreigners, while ensuring Singaporeans remain at the core of the local workforce.
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The minimum qualifying salaries (MQS) for new EP and S Pass applicants will go up from January 2027, and for those who are renewing it from the year after.
Moreover, from July 1, 2026, the local qualifying salary will be raised from $1,600 to $1,800 for full-time local employees. This means that firms hiring foreign workers must pay full-time employed local workers at least $1,800 a month.
These changes may influence the hiring of foreigners in Singapore and in turn have a knock-on impact on tenant demand for both HDB flats and private residential properties, says Huttons Asia CEO Mark Yip.
“This comes at a time when the supply of HDB flats fulfilling the 5-year minimum occupation period (MOP) and completed private residential properties is on the uptrend,” Yip notes.
He reckons that rents of HDB flats and private housing may face downward pressure and fall by up to 3% in 2027 and 2028 if demand fails to keep up with supply.
While the latest announcements may not have an immediate effect on Singapore’s rental market, which has seen year-on-year growth in volumes, it could still weigh on sentiment among foreign workers, says ERA Singapore CEO Marcus Chu.
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“Landlords and property agents may also see more cautious enquiries, with some tenants potentially re-evaluating their housing choices or delaying rental decisions,” Chu adds.
He expects a gradual adjustment in sentiment rather than a sudden shift, given the phased implementation timeline from 2027 and the continued need for foreign manpower in key sectors.
“Overall, Budget 2026 reinforces a shift towards a more location-driven and skills-led property market, where infrastructure and workforce strategy increasingly shape housing demand patterns,” says Chu.
Selena Ling, chief economist and head of OCBC group research, reckons the impact on the property sector will be muted — more a function of supply and demand — and does not expect a sharp drop in EP or S Pass foreigners simply because the qualifying salaries went up a few hundred dollars.
“At the margin, there will maybe be some overall curbing of foreign labour demand, but that is probably aligned with the government’s objective of staying manpower lean,” she adds.
Beyond the residential market, businesses in industries such as food and beverage (F&B) could potentially face operational pressures.
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This comes amid increasing rents, intense competition, and existing manpower constraints given the high staff turnover among F&B businesses. The first 10 months of 2025 saw 2,431 F&B outlets closing, of which six in 10 had been registered for five years or fewer. Of these, 82% had never been profitable.
In a statement on Feb 12 responding to the Budget 2026 announcements, the Restaurant Association of Singapore’s president, Benjamin Boh, notes that employers in the F&B industry “must brace themselves for a further step-up in the cost of doing business”, as the increase in the local qualifying salary, EP and S Pass requirements will result in “a heavy cost structure”.
Some relief for employers will come from the extension of the Progressive Wage Credit Scheme (PWCS) to 2028 and the Senior Employment Credit, although the PWCS also comes with a higher qualifying salary increase, which means that fewer employers will stand to benefit, Boh adds.
The association urges businesses to prepare for an elevated cost structure by reviewing their profit and loss (P&L) to factor in these new realities and see how best to absorb the higher costs.
“We expect that many [F&B] players will have to increase prices to absorb some of these costs in order to stay in business. While digitalisation is also another way to find efficiencies, many in the industry have already embarked on that journey, so there might not be much more efficiencies to squeeze from that,” the statement notes.
Looking ahead, the Restaurant Association of Singapore will share know-how and best practices on optimising P&L and managing the upcoming cost increase.
Desmond Sim, group CEO of the Realion (OrangeTee & ETC) Group, reckons that any impact on retail rents may be indirect. While higher qualifying salaries will increase operational costs for firms, especially those in service industries including retailers and F&B players, the effect on their occupancy costs will depend on each business’ cost structure.
“It could cause a possible increase in operational costs, and that pressure on tenants’ margins might potentially make any rental hikes more difficult to absorb,” Sim says.
Besides manpower costs, the challenge also lies in the availability of labour. While the measures aim to encourage hiring of local staff, certain retail and F&B roles remain difficult to fill with Singaporean workers, making foreign labour essential despite the higher costs.
Ling from OCBC says the continued lifting of higher qualifying salaries will be painful to companies currently struggling with high business costs, but this is not new per se.
“The continued push to upgrade and move up the value chain of activities is present in previous Budgets as well,” she adds.
Associate Professor Lee Kuan-Huei, director of programmes, business, communication and design cluster at the Singapore Institute of Technology, notes that the ongoing wave of retail closures highlights structural challenges that go beyond rising costs.
“Many outlets are still operating with models that no longer align with manpower realities, space limitations, and evolving consumer expectations,” she says.
Startups and small and medium-sized enterprises (SMEs) require strong support networks to experiment with new business models, access talent, and adopt emerging technologies, Lee adds.
Meanwhile, Wong Xian Yang, head of research, Singapore and Southeast Asia, at Cushman & Wakefield, believes the continued cost-of-living support could benefit suburban retail.
Budget 2026 initiatives to help with the cost of living include more CDC vouchers for Singaporean households, Cost-of-Living Special Payment for eligible adult Singaporeans, and U-Save rebates for eligible HDB households.
“Government support is expected to bolster consumer discretionary spending, with suburban retail likely to benefit given their high frequency of footfall,” Wong adds.
For EP holders, the monthly MQS will be raised from $5,600 to $6,000. In the financial services sector, which has higher salary norms, this will go up from $6,200 currently to $6,600.
For S Passes, the MQS will increase from $3,300 to $3,600. In the financial services sector, this will be raised from $3,800 to $4,000.
The qualifying salaries for older EP and S Pass candidates aged 45 and above will rise in tandem.
The changes will apply to new EP and S Pass applications from Jan 1, 2027, and to renewal applications from Jan 1, 2028. The latest revision to qualifying salary benchmarks follows earlier rounds of tightening, including a similar increase in EP qualifying salaries at the beginning of 2025.
Work permit levies for some sectors will also be adjusted, though these will take effect from 2028.
For the manufacturing and services sector, companies currently pay progressively higher levies across three tiers based on the proportion of their foreign workers in their total workforce. The tiers will be reduced to two tiers from 2028.
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