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Your company should be prepared to pay a lot to send employees to some of the hottest business destinations in Asia.
Four of the top 10 cities with the most expensive rental accommodations for foreign expats are in Asia, according to new data from ECA International, a global consulting firm that provides housing data from 180 of the most common locations across the world for international assignees.
Across Asia, the average monthly rental price for a high-end three-bedroom property is $3,600—above the global average of $3,000, according to ECA data from September 2013.
With its dense population and lean property supply, Hong Kong remains the priciest location globally to lease a three-bedroom apartment, according to ECA Accommodation Services Manager Alec Smith. An unfurnished three-bedroom apartment in an area of the territory fit for business expatriates averages $11,440 per month. The average rent for a similar apartment in New York City costs $9,200 per month.
Tokyo, Singapore and Shanghai also ranked in the top 10 most expensive rental markets at 6th, 7th and 9th, respectively. Rental prices in Tokyo have increased by 6 percent since September 2012, as confidence returned to the housing market alongside a turnaround in the economy, Smith said. However, a weaker yen has meant that the rental cost fell by about 15 percent when converted into U.S. dollars, he said. Ongoing demand in Singapore for high-end properties drove a 4 percent rise in rental prices during 2013.
China is a mixed bag, according to the data. Rental prices have stayed fairly even (and high) since 2012 in Shanghai and Beijing, with neither city seeing rises greater than 3 percent. But demand for expat housing in the cities of Shenzhen and Suzhou have generated a 9 percent hike in rents since 2012.
Moscow; Caracas, Venezuela; New York; and London ranked 2nd through 5th, respectively. Bogota, Colombia, was ranked 8th, and Lagos, Nigeria, came in 10th, despite its high-end rental market falling approximately 6 percent. Karachi, Pakistan, had the lowest rents recorded by ECA, not only in Asia, but globally.
Largest Rental Price Increases
The largest increase in rent during 2013—a dramatic 50 percent—occurred in Caracas due to the country’s rampant inflation that is keeping the cost of building materials high and stagnating much-needed construction. However, the Venezuelan currency’s depreciation means that the increase is not substantial when converted into U.S. dollars.
Economic prosperity and increasing numbers of business expatriates relocating to Dubai have spurred rental gains of 32 percent during 2013, with Dubai becoming more expensive than Abu Dhabi, according to the data.
Rents have risen by 29 percent in Sao Paulo, due to the increasing presence of international businesses and property construction and renovation ahead of the 2014 World Cup, according to Smith.
High rental growth was also observed in Nairobi, Kenya; Jakarta, Indonesia; Dublin, Ireland; and Bucharest, Romania, in 2013.
Notable Rental Price Depreciations
The most pronounced rental price drops were noted in Dakar, Senegal, where rents fell by 18 percent during 2013.
Large decreases were also observed in the Spanish cities of Barcelona and Madrid, of 11 percent and 7 percent, respectively. Market rents were found to be out of step with the income levels of many locals, leading to rental corrections in those locations, Smith said.
The impact of currency fluctuations should not be underestimated when assembling accommodation packages for assignees, he stressed. “Depending on how companies provide housing or allowances to their expatriates, major currency movements can have a big impact on costs,” he said. Along with the extreme example of Venezuela, rents in the South African cities of Johannesburg, Cape Town and Pretoria increased by between 4 percent and 8 percent in local currency terms; however, all have dropped in ECA’s global ranking when prices are converted into U.S. dollars for comparison, because the South African rand weakened against major currencies during 2013.
Still another example is Sydney, the most expensive location for rental accommodation in Australia. Rents for a three-bedroom apartment there have gone up around 3 percent since 2012. However, when converted into U.S. dollars for comparison, rental price drops of 10 percent were observed.
Roy Maurer is an online editor/manager for SHRM.
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