Which Asian cities are most expensive for expat rentals?

Hong Kong maintains it’s number one position as the most expensive for expat rentals. Demand is believed to be the force behind increased rental prices throughout Asia for expats.

David Sapsted

17 January 2018

For the fifth year running, Hong Kong remains Asia’s most expensive city for expatriate professionals to rent housing, according to a survey by ECA International.The average rent for a three-bedroom apartment in areas of Hong Kong popular with executive-level expats stands at $10,461, four per cent higher than this time last year and more than $2,000 a month more expensive than a similar property in second-placed Tokyo.

Hong Kong rent driven by supply issues

ECA latest Accommodation Survey – used by many companies to determine expats’ relocation packages – found that Hong Kong prices were being driven by high demand and a lack of mid-range supply as builders focused their efforts on so-called micro flats.“Hong Kong saw the first rise in rents for such flats last year for five years. Key driving forces included a slight increase in demand, continued lack of mid-range rental units under the recent continued supply of tiny flats and lack of new supply in areas near international schools,” said Lee Quane, regional director of Asia at ECA International.Mr Quane added that he did not expect any fall in demand for mid-range accommodation because multinational companies were still sending just as many staff to Hong Kong as in the past.

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Demand for housing among expats remains strong

Thomas Lam, head of valuation and consultancy at Knight Frank in Hong Kong, told the South China Morning Post, “The situation will not change until we have another financial crisis. The demand is still strong. We expect the price and rental of residential units will continue to increase steadily this year.”
Rents in many mainland Chinese cities also recorded rises, particularly in Shanghai, which came in third on Asia’s most expensive list.“Rents in Shanghai have risen owing to an increase in the number of inbound relocations to the city. This elevated demand in an already tight market has caused the rent rises we have seen in 2018,” said Mr Quane.“However, the fastest rates of increase have been witnessed in the Pearl River Delta where rents have risen in double-digit terms in both Guangzhou and Shenzhen due to high relocation rates to these cities. Supply is yet to match demand for residential accommodation, particularly in western Shenzhen, which has caused rents to increase at fast rates for the past seven years.”

Singapore moves down the list

By contrast, Singapore slipped down the list to eighth spot. “This is due to a slowing of economic growth and a net reduction in inbound assignments, exacerbating the surplus of higher-end properties on the market that would normally attract expatriates,” said Mr Quane. “This over-supply has reduced average rent levels in Singapore for the past three years.”

Mumbai rent jumps as demand continues to grow

Meanwhile, Mumbai rose three places in the top 10 and is now the fifth most expensive location in Asia for expats to rent. “Expatriates living in Mumbai are typically competing for properties in a relatively small number of districts relative to the size of the city as a whole. This high level of demand forces rents upwards, while developers are continuing to lift property standards in Mumbai which also raises the average rent level,” said Mr Quane.

Supply in Kuala Lumpur

Kuala Lumpur, however, dropped out of the top 40. “The property market in Kuala Lumpur has suffered from high levels of speculation over the past couple of years and high levels of new construction. The market is over-supplied, and landlords are having to compete significantly on price to secure tenants.“The domestic economy has not been strong enough to bolster demand for the excess of higher-end properties on the market. However, a slowdown in property construction and cooling measures from the Malaysian central bank should see the market stabilise in future years,” Mr Quane added.ECA International top 10 for expat rentals (last year’s position in brackets):
1. Hong Kong (1)
2. Tokyo (2)
3. Shanghai (5)
4. Seoul (3)
5. Mumbai (8)
6. Beijing (6)
7. Yokohama (4)
8. Singapore (7)
9. Osaka (n/a)
10. Metro-Manila (10)

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