ncreases in Singapore surpass those in New York and London; 'every time we'd counter, he'd just keep going up and up'.

SINGAPORE—In February, five months before the lease was up on her Singapore condo, Sally Shoult asked her real-estate agent to delicately sound out the landlord about renewing. Then she braced for impact.

"I'd been hearing horror stories," says Mrs. Shoult, a 39-year-old freelance copywriter from the U.K. "I was of two minds about whether I should even ask."

Tenants like Mrs. Shoult have reason to dread their turn playing rental roulette: Increases that 18 months ago ran 10% to 20% now can reach a jaw-dropping 100%. Rent for prime residential properties rose faster in the Asian metropolis than in any other city last year, surpassing the annual increases in New York and London, according to the consulting firm Knight Frank.

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Increases are steepest for large private condos in central neighborhoods, borne by affluent expats. In a March survey by the European Chamber of Commerce in Singapore, 97% of companies reported "visible anxiety and psychological distress" among staff due to rising costs. Almost 40% said they gave employees at least $1,120 a month in housing aid.

The hikes are weighing on the city-state's bid to overtake Hong Kong as Asia's premier financial hub. Pressed by lawmakers, the Ministry of National Development in November said Singapore remains an attractive destination for global talent, listing such strengths as trade links, high health and education standards and quality of life. The cost of rental housing, it said, is just one factor businesses consider in looking at a potential base.

But as that cost soars, it tests the limits of Singapore's appeal.

Mrs. Shoult's agent called back after a few anxious weeks. The good news: The landlord said the Shoults were such good tenants that he'd offer them a 25% discount off his asking price. The bad news: That asking price was double their current rent, which means they'd have to fork out 75% more—bringing their monthly rent close to $10,000.

The reasons for the rental frenzy are many. Expats started returning last year after riding out the pandemic elsewhere. At the same time, waves of new immigrants arrived from Hong Kong and mainland China, seeing the city as a stable place to park their money as Washington and Beijing clash over issues like trade and security.

To make things worse, just as foreigners rushed to the tiny island nation—about a quarter the size of Rhode Island, with a population of 5.6 million—there was unprecedented demand from Singaporeans. Construction of new units had stalled during the pandemic, and many locals were offering top-dollar for short-term rentals while they waited for their new homes to be built.

Real-estate agents said the sky-high demand led to fierce bidding wars.

"I was scared to drive because my phone wouldn't stop ringing," said Amy Zeng, an agent for Singapore-based ERA Realty Network, about the height of the frenzy last year. She said she was getting five to 10 times as many inquiries as usual, and deals were closing at breakneck speed. People were throwing down massive deposits, sometimes without even seeing the unit.

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