GUEST POST BY ANNA MICHIELSEN, GENERAL MANAGER, ECA INTERNATIONAL
Why are rents rising in so many cities around the world?
What rental price increases are being seen in APAC cities and further afield?
ECA surveys rental accommodation prices in 400+ cities around the world. Our latest data has just been published with rental rates for expatriate suitable apartments and houses of 1 to 5 bedrooms. ECA data is segmented from the 10th to 90th percentile of the market and additionally shows expatriate-preferred neighbourhood specific costs. Organisations utilise the data to set rental allowances, or ceilings with the range of data available enabling differentiation by seniority, policy type and/or family size.
ECA’s latest data shows property rental prices are rising in many cities around the world. Today’s rising prices can be seen against the backdrop of the demand shocks triggered by the Covid-19 pandemic. During the height of the pandemic (2020-21), ECA saw pronounced falls in long-term property rents in major cities around the world as expatriates went home, and the rate of new assignments slowed significantly. In addition, as tourism collapsed many short-term holiday rentals were converted to the longer-term market, increasing supply.
2022 it is a very different situation. Restrictions have been rolled back in many countries and cities and business districts are becoming busier, meaning that the appeal of living in central areas has returned and expatriates are coming back. As tourism also recovers some landlords are converting their properties back to the short-term rental market and a slowdown in construction has resulted in fewer newly built properties to add to supply. Global inflation, the highest it has been for decades, is exacerbating these supply side pressures with the cost of building materials inhibiting the delivery of new properties and landlords passing higher property maintenance costs onto tenants.
APAC region key highlights:
Perth average rental + 11% and Auckland average rental +7%
If you’ve been reading the news you’ll realise rental vacancy rates in Australia and New Zealand are very low and that scarcity is a major contributor to price rises. Most expatriates coming into Australia and New Zealand move to major cities, avoiding what at the moment, are even higher increases and tighter vacancy rates in many regional areas. In Australia Perth is showing the highest increases followed by Canberra with high competition for properties in prime districts.
Singapore average rental +13%
Delays to property construction in Singapore coupled with increased demand have led to significant rent increases. Singapore is also positioning itself well coming out of COVID and it’s increasing international relocation demand is, to some extent, at the expense of Hong Kong where traveller quarantine requirements and concern over future lockdowns are reducing expatriate interest.
Highlights further afield
Dubai average rental +10%
The Dubai rental market has staged a significant recovery as international assignments have resumed. Renters now place a higher premium on outdoor space as well as extra room for remote working, so we have seen higher rent increases for houses than apartments.
London average rental +13%
In London high demand is combining with acute property shortages as many landlords sold their properties to owner-occupiers during the pandemic. Rent increases are higher in central London districts.
Russia, Turkey & Venezuela are seeing very significant – to extreme – increases due to economic turmoil. If your organisation has, or is sending expatriates to these countries it’s especially important to keep abreast of cost changes to ensure allowances remain appropriate.
*increase % are shown over 12 months.
Anna Michielsen – is ECA’s General Manager for Australia, New Zealand and the Pacific and is based in Sydney. ECA provides Assignment Management Software, Assignment Calculators and Tools, Data, Consultancy and Training for organisations with globally mobile workforces. Anna can be found on LinkedIn or contacted at email@example.com.