Many multinational companies have either relocated to other parts of Asia where costs are lower, or have slashed the housing budgets for staff.

"Expats usually arrive during the summer months. But we all panicked when July passed and we realised that no one had overseas clients," Claudia Heck-Chioy, the manager of Hecks Realty, told the Sunday Times.

The newspaper surveyed eight property agencies which all said the market was worse than in 1998, in the trough of the Asian financial crisis, with rents up to 40 percent cheaper than they were last December.

The saving grace in 1998 was that the US economy was still performing, said Nicholas Mak, senior research and consultancy manager with property consulting firm Chesterton International.

"US expatriates were still arriving then. Now, they are getting laid off and fewer are coming to work here."

Now, tenants are hard to find even though rents are tumbling as landlords try to keep properties occupied.

"You can smell their desperation," said Natasha Fernandez, 28, a marketing executive.

The rent on the fully-furnished, three-bedroom, 1800-square-foot apartment she shares with two expats is just S$2200 (US$1250) a month.

A year ago, the property in Newton, close to the inner city, would have fetched about $3500 dollars a month.

"You can definitely tell how eager landlords and rental agents are. Many are willing to add or remove furniture or other things just to seal the deal," Fernandez said.

At the upmarket end of the property chain, tenants are breaking expensive leases and finding better deals as companies cut housing allowances for senior executives from $11,000-$14,000 a month, to between $8000 and $10,000 dollars.

"Many expats who were renting... bungalows with no pools for 12,000 have found they can now rent a house off Holland Road with a pool, and grounds of about 10,000 sq ft for as little as $8000 to $9000 dollars now," said Susan Ye, manager of the Isabel Redrup estate agency.

With the take-up rate in prime areas half of what it was a year ago, many agents have resorted to calling one another to check if they can work together to rent out properties and split the one percent commission.

And the outlook for the first half of next year remains gloomy.

"Rentals will drop further if there is war in Iraq or other security alerts in this region," said Wallace Chu, research manager at property consultancy firm FPD Savills International.

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