Expatriate Rents Increase in Singapore for the First Time in Five Years

The average monthly rent for expatriates in Singapore has risen for the first time in five years, according to the findings of the latest research published by ECA International.

This makes the average monthly rental price for an unfurnished, mid-market, three-bedroom apartment in areas commonly inhabited by international executives in Singapore US$4,233 – a rise of 1.4 percent from last year.

“The last 12 months have seen an increase in overseas relocation to Singapore, especially in the fintech and pharmaceutical sectors,” said Lee Quane, Regional Director – Asia at ECA International. “There was also evidence that expatriate populations were moving from Hong Kong to Singapore due to the relative stability of the latter, thus increasing the demand for housing. However, the recent establishment of tighter restrictions on work permits for overseas workers have now counteracted this somewhat. It is also important to note that the rise in the average rent in Singapore remains relatively low, at less than 2 percent from last year. Also, Singapore is still only the ninth most expensive location in Asia for overall rental costs, coming behind cities such as Shanghai, Mumbai and Seoul.”

Research by ECA International compares rental costs in accommodation in areas typically inhabited by expatriate staff in over 360 locations worldwide.

Asia Gets More Expensive

Hong Kong has been named the most expensive location in the world for expatriate accommodation for the third year in a row. The average monthly rent in the city has increased by 3.45 percent to US$11,318 from the year prior.

Quane said, “Despite another increase in rental costs for expatriates living in Hong Kong, the rise was lower than the 4.9 percent increase that was seen the year before. Hong Kong has the most expensive rents due to a number of factors – notably, the high population density of the territory and limited opportunities to build new homes, which combine to drive rental costs upwards. However, in light of the prolonged anti-government protests and the ongoing coronavirus outbreak, we expect to see rents fall throughout 2020 as the number of overseas workers in Hong Kong drops significantly and the usually high demand for housing is tempered.”

Cities in China saw varying rental trends over the past year. Although expatriate accommodation costs in Beijing was fairly static, with the capital city staying in 19th place globally, other Chinese cities saw big increases in the average rent, with Shenzhen seeing the biggest increase of 7.22 percent.

“The Greater Bay Area Economic Zone continues to go from strength to strength. Rents in the region have followed suit for a number of years – perhaps most significantly in Shenzhen, where rental costs have been increasing by 7-10 percent per year since 2013. The rental market may be more stable in the years to come, with the local government making efforts to increase the availability of land for new property construction,” said Quane.

Taipei, the capital of Taiwan, was another city that saw steep increases in rent from last year with a rise of 5.29 percent – moving the city into the top 50 most expensive locations in the world for expatriate accommodation.

Quane explained, “The rent increases seen in Taipei are due to two main factors. Firstly, expatriate numbers have increased in the city due to the award of government contracts for a major offshore wind power project. Secondly, after years of unsustainable rises to property sales prices in Taipei, competition for rentals has increased as many local nationals continue to rent in anticipation of future drops in the housing market.”

Elsewhere, Rental Drops

All Australian locations saw a drop in rent, with some reporting significant decreases. However, Canberra proves to be an exception, with the city being the only one in the country to buck the downward trend. Surprisingly, Australia’s biggest city, Sydney, saw one of the largest drops in average rent.

“Sydney’s previously growing rental market took a turn between 2018 and 2019 as its traditionally high prices dropped. Coupled with low-interest rates, a subdued sales market has allowed many would-be-renters to purchase properties instead of renting, thus prompting an upturn in vacancy rates across all city suburbs,” explained Quane.

The United States has become considerably more expensive for expatriates, with nearly all U.S. cities rising in the rankings. The U.S. now has three cities in the global top ten, notably New York, San Francisco and Miami. This can be attributed to the enduring strength of the U.S. economy, as the dollar gains against most major world currencies.

Quane said, “Generally speaking, the U.S. cities in our rankings have risen due to the strong performance of the dollar. However, there are local reasons for the increases in expatriate rental costs as well. For example, biotech and pharmaceutical industry sectors in Boston have drawn expatriates to the city in large numbers, hence bolstering demand for properties in prime neighbourhoods. On the other hand, New York saw lower than expected rental increases after Amazon withdrew their plans to establish a second headquarters in Queens.”

COVID-19 Concerns

Despite rising rents across Asia, Quane believes that the COVID-19 pandemic will see downward revisions in rent prices across the board.

He explains, “The COVID-19 pandemic is causing a fall in demand for rented accommodation across the globe, including the Asia-Pacific region. In many locations, the demand-side of the rental market is effectively frozen. Uncertainty about the current economic landscape means that people are less likely to move home in the current economic situation. This includes people moving internationally for work and also people moving domestically. In the case of the former, companies are likely to either reduce or halt international relocations until travel restrictions are eased and the economic situation improves. It is also expected that unemployment rates in Asian economies will rise over the course of 2020 and we will likely see pay cuts or pay freezes as well. This will lead to tenants either requesting rent reductions from their landlords or relocating to cheaper accommodation throughout the region.

“The impact is likely to be uneven. Some economies are likely to be more affected than others. For example, the economic impact of COVID-19 in Hong Kong will likely accentuate a recession which started due to political instability in 2019. Similarly, Singapore  is the destination for many relocations into the region. As such, if the rate of relocations fall, so too will the demand for rental accommodation which will reduce the negotiating power of landlords during contract renewals with existing tenants. The rental market in other economies is more geared towards domestic relocations. As such, there will be a potential downward impact on the rental market in other locations, but this will be less than in locations such as Hong Kong and Singapore with the exception of locations at the epicentre of the COVID-19 outbreak, such as Wuhan, where the impact of the virus is likely to be felt for a much longer period of time,” added Quane.

Top 10 most expensive locations for expat rental accommodation in Asia