Fri, 15/03/2019 - 08:08
Hong Kong remains the most expensive location in the world for expatriate rent, with typical expat accommodation averaging USD10,929 per month.
This was one of the findings of the latest research published by ECA International, the world's leading provider of knowledge, information and software for the management and assignment of employees around the world.
Rental prices for an unfurnished, mid-market, three-bedroom apartment in areas commonly inhabited by international executives in Hong Kong average USD10,929 per month – an increase of 4.9 per cent from last year.
“Rents increased across Hong Kong during 2018 with limited availability of suitable accommodation, a long-term issue for the Hong Kong housing market, being the main driver,” says Alec Smith, Accommodation Services Manager at ECA International. “Rent increases are not just limited to central Hong Kong anymore either, with rents expected to rise throughout outlying neighbourhoods in 2019 too, as international firms seek more affordable office space and try to take advantage of cheaper suburbs.”
ECA International has been conducting research into accommodation costs for international executives for more than 20 years to help companies provide the right housing options as part of the overall compensation package for mobile employees. The research compares rental costs in accommodation in areas typically inhabited by expatriate staff in over 320 locations worldwide.
New York remains the second most expensive city in the world for overseas workers to rent in, and by far the most expensive location in the Americas, with USD10,101 being the average expat rental cost. However, rents have dropped by over USD250 since last year, as demand dropped slightly.
Smith explained “2018 saw the market delivery of a large number of newly constructed rental properties. This eased issues with low vacancy rates that normally apply in New York, leading to some modest decreases in average rents.”
Rental costs in Tokyo rose by an even greater rate than Hong Kong, with typical expat accommodation now costing USD8,668 per month on average. This is a rise of 6.9 per cent and means that Tokyo is the third most expensive location in ECA’s survey.
Smith says: “While the Tokyo rental market has historically always been tight, 2018 saw a significant upturn in the rate of rent increases. An increase in tourism in recent years and the accompanying increase in landlords preferring to lease out accommodation on a short-term basis has contributed to rising costs in recent years. With both the 2019 Rugby World Cup and the 2020 Olympics being hosted in Tokyo, we have seen a major surge in business interest in Japan's capital. All of these factors will contribute to increasingly limited availability of suitable rental accommodation in Tokyo, with rent increases are expected to continue into 2019.”
Rent in London is the most expensive in Europe for expats, averaging USD7,189 per month. However rental costs decreased in central London (zone one) this year, whilst rent in outer London remained stable.
“A polarisation of rent changes was observed between properties in central and outer London since the previous year. Rents fell in prime neighbourhoods in London travel zone one, with salaries for top jobs largely stagnant and demand waning. Rents in outer London were more stable, but are anticipated to increase with London property purchases growing ever more out of the reach of many Londoners,” says Smith.
Rental costs across Europe rose significantly through 2018, due in part to the strength of the Euro. Dublin saw the biggest rises in expatriate rental costs in Europe with a rise of USD880 in just one year but other major cities such as Madrid, Rome, Paris and Barcelona all saw increases over USD500.
In Spain, Madrid saw the average expatriate rent rise by USD650 to USD2,828 (EUR2,299), whilst in Barcelona rent increased by USD566 to USD2,521 (EUR2,049).
Smith says: “The past 10 years have seen a significant turnaround in the fortunes of Dublin’s residential rental market. The global financial crisis exposed a property bubble in the Irish capital and rents have increased significantly with each subsequent year of recovery. Meanwhile, Madrid and Barcelona have reversed years of falling rents that followed in the wake of the global financial crisis. Their markets are flooded with renters, both from the local young professional population, and international assignees.”
Meanwhile in Paris, as the city continues to target attracting business due to Brexit, demand remains strong for property in the French capital and expatriate rent has risen to USD4,090 (EUR3,324), an increase of over USD 700.
There were contrasting trends for the Australian cities in the rankings as Sydney and Melbourne continued to rise, but Perth plummeted to 168th overall – a fall of 131 places since 2012.
Smith says “Melbourne has experienced steady growth in rents over recent years, with recent price rises pushed upwards by the city's increasing population. In contrast, Perth's rental market has been subject to a sustained decrease in rental costs over the last few years, owing primarily to the downturn in its mining, oil and gas sectors. Future prospects for the city's economy appear more optimistic though - with recent upturns in other industry sectors - and rents are expected to stabilise in coming years.”
At the bottom of the rankings it is the new addition Bursa which takes the spot of the cheapest location for overseas workers to rent in. The Turkish city has average rental costs of just USD560 per month.
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