Hong Kong has been named the most expensive location in the world for expat accommodation, for the third year in a row. 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.
The average monthly rental price for an unfurnished, mid-market, three-bedroom apartment in areas commonly inhabited by international executives in Hong Kong was USD 11 318, an increase of over 3% from last year. However, the rise of 3.45% was less than seen in previous years and there is likely to be significant drops in rent over the coming months.
“Despite another increase in rental costs for expatriates living in Hong Kong, the rise was lower than the 4.9% rise seen the year before” said Lee Quane, Regional Director — Asia at ECA International. “Hong Kong has the most expensive rents due to a number of factors such as the high population density of the territory and limited opportunities to build new homes, which combine to drive rental costs upwards. However, in light of the prolonged anti-government protests and coronavirus outbreak currently underway, we expect to see rents fall throughout 2020 as the number of overseas workers in Hong Kong drops significantly and the usually high demand for housing is tempered.”
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 360 locations worldwide.
Elsewhere, rental prices increased in Singapore, after five consecutive years of falling rents for expatriates. Although Singapore remains in 25th position in the rankings, the average rental cost rose to USD 4 233 per month, a slight increase of 1.4% from last year.
Quane said “The last 12 months have seen increases in overseas relocation to Singapore, especially in the fintech and pharmaceutical sectors. There was also evidence that expatriate populations were moving from Hong Kong to the relative stability of Singapore, thus increasing the demand for housing, although tighter restrictions on work permits for overseas workers have now counteracted this somewhat. It is also important to note that the rise in the average rent in Singapore remains relatively low at less than 2% from last year, and Singapore is still only the ninth most expensive location in Asia for overall rental costs, behind cities such as Shanghai, Mumbai and Seoul.”
Cities in China saw varying rental trends over the past year. Although the capital city Beijing was fairly static, staying in 19th place globally, other Chinese cities saw big increases in the average rent, with Shenzhen seeing the biggest increase of 7.22%.
“The Greater Bay Area Economic Zone continues to go from strength to strength. Rents in the region have followed suit for a number of years, perhaps most significantly in Shenzhen, where rental costs have been increasing by 7–10% per year since 2013. Future years may lead to more stability in the rental market though, with the local government making efforts to increase the availability of land for new property construction” said Quane.
Taipei, the capital of Taiwan, was another city which saw steep increases in rent from last year with a rise of 5.29% — moving the city into the top 50 most expensive locations in the world for expat accommodation.
Quane said “The rent increases seen in Taipei are down to two main factors. Firstly, expatriate numbers increased in the city due to the award of government contracts for a major offshore wind power project. Secondly, after years of unsustainable rises to property sales prices in Taipei, competition for rentals has increased as many local nationals continue to rent in anticipation of future drops in the housing market.”
Australian locations all saw rents drop, significantly in some cases, with the exception of Canberra which was the only city to buck the downward trend. Surprisingly, biggest city Sydney saw one of the largest drops in average rent.
“Sydney's previously growing rental market took a turn between 2018 and 2019 as its traditionally high prices dropped. A subdued sales market combined with low interest rates allowed many would-be-renters to purchase properties instead of renting, prompting an upturn in vacancy rates across all city suburbs” explained Quane.
The US has become considerably more expensive for expats with nearly all US cities in the rankings having risen, some considerably. The US now has three cities in the global top ten (New York, San Francisco and Miami) as the strength of the US economy endures, with the dollar gaining against most major world currencies.
Quane said “Generally speaking, the US cities in our rankings have risen due to the strong performance of the dollar, but there are also local reasons for the rises to expatriate rental costs too. For example, in Boston, biotech and pharmaceutical industry sectors have drawn expatriates to the city in large numbers, bolstering demand for properties in prime neighbourhoods, whereas New York saw lower than expected rental increases after Amazon withdrew their plans to establish a second headquarters in Queens.”