Rents are on the rise in Asia spurred on by strong economic growth among most of its economies, according to the latest accommodation reports published by ECA International. Tokyo is the most expensive location globally for two-bedroom rental property. The Japanese capital is followed by Hong Kong (3rd in the global rankings), Singapore (5), Seoul (15) and Shanghai (24).
In Singapore, the recession along with a wave of new housing hitting the market prompted rental prices for an unfurnished two bedroom property to fall by approximately 17% in 2009, according to the report data. However, this pattern was reversed last year when rents rose 15% to US$2,810 a month. Singapore rose from 6th to 5th position in the overall ranking.
“The rebound in Singapore has been driven by a general recovery in house prices along with increased demand,” said Lee Quane, Regional Director, ECA Asia. “Assignee numbers are up again in Singapore following falls during the economic downturn. This has placed pressure on rental accommodation, particularly in areas popular with expatriates.”
Hong Kong has witnessed some of the biggest price increases in the world, reflected in a jump up the ranking from 9th to 3rd position over the year. The price of renting two-bedroom accommodation rose by 22% to US$2,830 a month between 2009 and 2010. This contrasts with rent falls of around 25% the previous year.
“Land in Hong Kong is already expensive due to the lack of space,” said Quane. “Additionally, low interest rates, high liquidity in the market and a shortage of supply have contributed to pushing rents up.”
Published annually, ECA’s Accommodation reports provide information on rental costs in over 120 locations worldwide. Rental prices for two bedroom apartments rose almost 7% within Asia last year having fallen more than 10% the year before. Globally, rents have fallen by 1%.
“Two years ago we witnessed a drop in rental prices across Asia as a result of the recession,” says Quane. “The strong rebound in rental rates in many cities reflects both the rapid economic recovery and the continued expansion of companies into the region.”
“Housing is one of the most costly aspects of an international assignment and companies need to ensure that they have an expatriate housing policy in place that takes rent price fluctuations into consideration,” explains Quane. “Regular reviews of allowances and policies as well as delivery of the allowance are fundamental in ensuring that companies guarantee that they keep
pace with the local market.”
Exchange rate fluctuations play an important role when making direct comparisons of residential property to let between cities worldwide. For the purposes of comparison rental prices have been converted to US dollars.
“The strengthening of the Singapore dollar against its US counterpart has contributed to the relative increase in accommodation costs there – when Singapore rents are quoted in local currency they have increased at the lower, albeit significant, rate of 9% year-on-year, ” said Quane. “Such currency movements can have a big impact on costs for companies sending employees on assignment. Tokyo is a case in point – the strengthening of the yen against
major currencies, including the greenback, means that while rental prices quoted in yen dropped 7%, they increased 2% when converted into dollars.”
Rents in Shanghai and Beijing, globally ranked 24th and 45th, rose last year after falls the previous year. Chinese locations span the ranking with Shenzhen, in 114th position, the cheapest of the locations there for two bed apartments reflecting the big variations in costs across the country.
The cheapest rental property surveyed is in Karachi where a two-bedroom apartment is on average 17 times cheaper than in Tokyo.
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