Hong Kong remains the world's most expensive city to rent accommodation and Asia is home to six of the world's top ten most costly rental locations, according to a survey conducted by ECA International, the world's leading knowledge and solutions provider for international human resources professionals.
Undertaken annually, ECA's Accommodation Survey ranking compares rental prices in 92 locations worldwide. The survey data is used in ECA's Accommodation Reports, which ECA Member companies and clients consult when calculating housing policy and allowances for their internationally mobile staff.
On average a three-bedroom apartment in a popular expatriate area in Hong Kong costs approximately US$ 9,734 a month. This is 13 per cent higher than a year ago, when the equivalent apartment would have cost approximately US$ 8,592, and 15 per cent more expensive than Moscow, the survey's second most expensive location for rental accommodation.
"A number of factors contribute to Hong Kong's high rental prices. These include a lack of space which makes land expensive and an increasing demand for high-end developments as many companies, international finance firms in particular, expand their presence here," said Lee Quane, General Manager of ECA in Hong Kong.
The gap between Hong Kong and Tokyo, Asia's second most expensive location according to the survey and ranked 4th globally, is widening since rental prices in the Japanese capital have remained relatively stable in the last year.
"However, other cities in the region look set to catch up. The average monthly rent for a three-bedroom apartment in Singapore, ranked 9th globally, is typically US$ 4,460. While this is half as much as an expatriate would pay for similar accommodation in Hong Kong, tight supply has pushed prices in Singapore up by a massive 33 per cent between 2006 and
2007 – the biggest increase within Asia and almost 2.5 times more than the increases experienced on the Hong Kong rental market in the same period.
"Exchange rate fluctuations play an important role when making direct comparisons of residential property to let between cities worldwide,"
continues Quane. "When using the US dollar as a point of reference it is not surprising that rental prices have gone up in locations such as Singapore or Shanghai, where the local currency has strengthened against the dollar. However, this makes rental rises in Hong Kong, where the currency is pegged to the weak US dollar, all the more significant."
Six of the top 10 most expensive locations in the world are in Asia, with Mumbai (6th), Seoul (7th), Singapore (9th) and Ho Chi Minh City (10th) joining Hong Kong and Tokyo. Moscow, New York, London and Caracas make up the 10 most expensive cities globally to rent a three-bedroom apartment.
"On average rental prices in Asia are approximately US$ 3,820; well above the global average of US$ 2,950. A robust economy and increased demand for high-end accommodation have been instrumental in driving rental prices up,"
explains Quane.
High rental prices in Moscow, New York, Tokyo, London and Seoul largely reflect high living costs in these locations, while in, Mumbai and Ho Chi Minh City increasing demand has pushed prices up. Caracas – which has seen the survey's greatest rental price rise (41 per cent) – makes the top ten since it is not unusual for dangerous locations, such as this, to be expensive for foreigners who will prefer to reside in more costly compounds where security is good.
According to the survey, Karachi is the cheapest city in the world to rent a three-bedroom apartment, with the average monthly rent there nearly 17 times cheaper than the equivalent in Hong Kong. Atlanta, Nairobi, Vilnius and Guangzhou are the five cheapest cities to rent.
In India, rental prices in Mumbai have increased by 21 per cent in the last twelve months – the second biggest increase in the region after Singapore.
The city is the 3rd most expensive location in Asia and ranks 6th globally.
Its rental prices have increased more than 1.5 times more than Hong Kong.
New Delhi, which is also rising up the ranking, is in 22nd position globally. A low supply of quality apartments coupled with increased demand in the sector is behind these high positions in the ranking.
In China, rental prices in Shanghai, ranked 12th globally, continue to rise at a steady rate as demand increases. Beijing is ranked 16th. Rents in Guangzhou, placed 91st, rose by 18 per cent between 2006 and 2007 mainly as a result of rapidly increasing demand.
"While prices in Beijing are likely to rise sharply this year, due to the Olympics, the effects of this are unlikely to be long lasting and rents after the games should return to their normal levels. But for companies with assignees with a tenancy renewal coming up before the games start it is advisable to negotiate the renewal as early as possible," said Quane.
Worldwide
Some of the survey's biggest rank movements have been experienced in the Middle East with Abu Dhabi, Sharjah and Doha rising 19, 17 and 12 places respectively. This is generally the result of high demand that has not been met with a supply of suitable properly. Despite a slowdown in the rate rental prices have been increasing, Dubai, ranked 13th, remains the most expensive location for renting property in the Middle East.
The biggest rental increases in Europe have been in Moscow (by 29%) between 2006 and 2007, consolidating its position as the most expensive European location followed by London and Paris. Bucharest, which has experienced rental prices rises of 23 per cent this year, is the region's biggest climber up the ranking. Vilnius is the cheapest place to rent a 3-bedroom apartment in the region.
Lagos, ranked 18th, is the most expensive African location, while Nairobi (89) has the continent's least expensive rental property for expatriates.
In Australasia, rental property is more expensive in Sydney (32) than in Perth (49); followed by Auckland (61), Melbourne (71), and Adelaide (78).
About ECA International (www.eca-international.com) ECA International is the world's largest membership organisation for international human resources professionals, serving a global network of over 4000 HR professionals in 71 countries. The leading provider of online data, software solutions and advice for more than 1500 international companies, ECA's innovative approach has been providing cost-effective solutions to international HR management since 1971.
ECA's services cover: cost of living indices, accommodation and benefits, expatriate and local remuneration, tax, social security and labour legislation, international assignment packages, daily business expenses rates and consultancy specialising in international HR policies.
About ECA's Accommodation Survey
ECA's Accommodation Survey is used to compile individual Accommodation Reports. Each report is a guide to the costs and procedures of renting expatriate accommodation within particular cities around the world. They are used by multinational companies to assist them in providing suitable accommodation allowances to their expatriate workforce in their locations of operation. Accommodation Reports are available to non-members companies as well as ECA member clients.
ECA has been producing Accommodation reports since 1996. ECA produces reports for 115 cities. These cities are chosen because ECA Member companies employ a significant number of expatriates in these locations and reliable rental prices and information are available. For the purposes of year on year comparison 92 cities have been used in the rankings.
To ensure impartiality and maintain accuracy of information, data from a number of sources is used to compile each Accommodation report. The principal sources being: ECA survey data, specially collected surveys and information from letting agents and relocation agents.
The rental prices were collected in September 2007 and have been converted into US$ for ease of comparison using the September 2007 exchange rate.
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