Hong Kong remains the most expensive location in Asia for high-end rental accommodation, according to the findings of the latest Accommodation Survey published by ECA International.
“Over the past five years, Hong Kong has continued to top our regional rankings. With a high population density and a consistently limited supply of property, average rents in the territory have long been more expensive than in other high-profile cities,” said Lee Quane, Regional Director – Asia, ECA International.
Rents for an unfurnished three-bedroom apartment across popular expatriate neighborhoods in Hong Kong average US$10,189 per month.
“Despite high rental prices in Hong Kong, average rental costs here have fallen by around 13 per cent since 2012,” said Quane.
Over this period, the residential rental market has been facing downward pressure as many homeowners are leasing out their properties rather than selling them.
On the demand side, factors such as companies reducing the levels of assistance provided to assignees and the conversion of assignees to permanent terms, where company assistance in meeting housing costs is reduced or removed, has also meant that landlords with properties in the areas popular with expatriates are having to reconsider the rents they demand.
In US dollar terms, rents in the city are more than 14 per cent higher than in Asia's next-most expensive location, Tokyo. Five years ago, rents in Hong Kong were around 20 per cent higher than in the Japanese capital but the gap has decreased significantly since then.
Tokyo is followed by Seoul, Yokohama, Shanghai and Beijing in the regional rankings.
Singapore comes in at 7th position in the regional rankings this year, falling from 4th last year.
“Expatriate numbers in Singapore have stabilized recently, which has curbed demand for rental property in popular expatriate neighborhoods.
“This, combined with an increased supply of property in the market, has caused landlords to respond by reducing rental prices. Since 2012, average rents in Singapore have therefore significantly decreased,” said Quane.
Mainland China and Macau
Shanghai, which was ranked as having the 3rd most expensive high-end rental accommodation in Asia a year ago, has moved down two places to 5th. This is due to the large rental price rises in Seoul (3rd) and Yokohama (4th). Within China, Shanghai is just ahead of Beijing (6th regionally), Dalian (19th) and Guangzhou (20th).
The average rent of ranked locations in China has generally risen over the past year.
“Our recent review of average rent levels in China suggests that the introduction of VAT is a contributing factor to some landlords raising asking rents this year.
“Shanghai, Beijing, Shenzhen and Guangzhou all reported notable increases in average rents in the past year. Without the VAT changes, we would have expected many locations to post minimal changes in average rents in 2016 as expatriate demand has faltered amid economic uncertainty,” said Quane.
Macau has remained relatively stationary in the regional rankings in the last year, falling one place into 12th position this year.
Tokyo has largest rent increases in Asia over the past 12 months
Across the region, the average rental price for a three-bedroom property averages US$3,124 – just 1 per cent higher than observed last year.
The largest rent increases in Asia over 12 months were observed in Tokyo, although this still wasn’t enough to overtake Hong Kong.
The cost of renting a three-bedroom apartment increased, driven by Japan’s continued strong economic performance and increasing demand from expatriates. This has put pressure on the supply of suitable housing, pushing up prices.
A similar trend was also observed in Indian cities, with average rental costs increasing in Mumbai (8th regionally), New Delhi (16th) and Kolkata (21st).
India’s standing in the global marketplace continues to strengthen, where demand for high-quality accommodation in major cities and a persistent lack of supply have kept rents high.