While rental accommodation costs in many locations in China have increased in the past 12 months, Shanghai is now the most expensive location in mainland China, and the third most expensive location in Asia, according to recently published research findings by ECA International.
“Rents in Shanghai have risen owing to an increase in the number of inbound relocations to the city,” said Lee Quane, Regional Director – Asia, ECA International. “This elevated demand in an already tight market has caused the rent rises we have seen in 2018.”
However, the fastest rates of increase in the country is 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, ECA International observed.
“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,” said Quane.
No surprise: Hong Kong rent the most expensive in Asia
Topping the list of the most expensive rental accommodation in Asia—to nobody’s surprise—is Hong Kong.
According to ECA’s findings, rental prices for an unfurnished, mid-market, three-bedroom apartment in areas commonly inhabited by international executives in Hong Kong average US$10,461 per month. This is US$2000 more than the monthly rent in Tokyo—the next most expensive Asian location, ECA added.
Research findings indicate that rents in Tokyo have also continued to go up, rising by 4% on average.
“With a high population density and a consistently limited supply of property, the average rent in Hong Kong continues to remain more expensive than in other high-profile Asian cities,” said Lee. “Rents have risen slightly in the past 12 months. Despite the high rental costs in Hong Kong, rents for the type of accommodation featured in our research remain lower than they were in 2012.”
The dropping rents in Singapore
While these North Asia cities’ rents have gone up, Singapore has continued to slip down the rankings as accommodation prices continue to drop.
“Singapore is now the eighth most expensive location in Asia for rental accommodation, down one place from last year, and down from fourth in 2016,” said Quane said. “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. This oversupply has reduced average rent levels in Singapore for the past three years.”
Other Asian cities where rents have dropped
In general, the costs of rental accommodation in Asian cities have risen in the past 12 months, with declines evident only in a handful of locations, such as Ho Chi Minh city, Jakarta and Yangon, said ECA International.
Likewise, Kuala Lumpur’s fall down the rankings shows no signs of stopping, ECA observed.
The Malaysian capital is now out of the Asian top 40 most expensive rental locations and more affordable than places such as Colombo, Sri Lanka, and Kathmandu, Nepal, the firm added.
“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 oversupplied while landlords have compete significantly on price to secure tenants,” Quane said.
The domestic economy has not been strong enough to bolster demand for the excess of higher-end properties on the market, he pointed out. However, a slowdown in property construction and cooling measures from the Malaysian central bank should see the market stabilize in future years, he predicted.