Hong Kong is the most expensive city in the world for expats to rent an executive apartment, according to new research. Despite rents falling between 2% and 3% last year, Hong Kong still has the costliest rental sector with an unfurnished three bedroom apartment averaging US$11,550 a month, the data from international HR provider ECA International shows.
Hong Kong is followed by Caracas in Venezuela, where a lack of suitable properties and high demand driven by a booming petroleum industry led to rents continuing to rise dramatically. New York, Moscow and Tokyo complete the list of the top five most expensive locations in the world to rent a three bedroom apartment.
To assist companies in deciding what accommodation policy to adopt and what level of housing allowance to provide to international employees, ECA International produces Accommodation Reports for more than 130 locations. Published annually, these reports provide information on the types of accommodation and geographical areas usually favoured by international assignees.
‘In many of the locations that are attracting increasing numbers of expatriates, such as Caracas or Mumbai, strong demand and a limited supply of suitable rental properties are pushing up rents for high end property, in some cases quite dramatically,’ said Lee Quane, regional director, Asia, ECA International. In other locations such as Hong Kong, demand has been considerable for some time, due to limited land or a burgeoning middle class, and rental prices have more or less remained at the same high levels as this time last year,’ he added.
Quote from ExpatForum.com : "I'm going to be moving to HK with my partner and our son (4 years old). We'll be looking to rent an apartment on HK island. Is there a standard deposit size we need to allow for (1 month, 2 month etc) or any other costs we will be expected to pay when we sign the rental contract? Also can anyone recommend a good area for families that's got a 30 min or less commute for someone working in central district?"
Within Asia, the most expensive high end rental property after Hong Kong is found in Tokyo (5th globally) followed by Singapore (8th), Shanghai (11th) and Seoul (14th) while Karachi in Pakistan has the region’s lowest rents in the sector. ‘Asian locations dominate the list of the top 20 most expensive locations for rental property. With more and more companies setting up operations in the region the need for the type of housing appropriate for international assignees has increased. Yet with an already limited supply of such properties in many countries here, demand significantly exceeds supply, putting upward pressure on rents,’ explained Quane.
Despite having the second highest rents in Asia, Tokyo rents are 5% lower than a year ago. Falling demand as many international companies scale back their operations in Japan to reduce costs has lowered the pressure on availability and thereby rental prices. Rental increases have remained modest in Singapore although it has maintained its ranking as the location with the third highest rents in Asia after Hong Kong and Tokyo. Rents for an unfurnished three bedroom apartment in Singapore average US$5,510 per month, 50% higher than the regional average.
The biggest rental price increases in the region have been in mainland China, where demand for high end accommodation is growing as companies expand their operations in the country. While a series of measures have been introduced by the Chinese government to try and curb speculation on the sales market, rents continue to increase across the country. The increase has been most pronounced in Beijing, ranked 19th globally and up from 26th last year, following a year on year increase of over 12%.
Rents in India have also increased significantly as more companies establish themselves there with Bangalore seeing an average increase of more than 12% since the same time last year. In Mumbai, rents have gone up 7% on average over the year as demand from the growing number of expats for high end property continues to exceed supply, putting upward pressure on prices. ‘Expats often gravitate towards particular areas of cities because of the location of international schools, embassies or social focal points. These tend to be the more expensive, prestigious areas in a city,’ said Quane.
‘For many companies sending employees on international assignment, financing accommodation can be one of the most significant assignment costs incurred, so companies looking to control costs should consider the issue holistically, taking into account not only the standard of the accommodation they provide, but also its size and location,’ he added.