SINGAPORE (EDGEPROP) - Rents in Singapore’s central areas have risen for the first time in five years, according to research by ECA International. The average monthly rental price for an unfurnished, mid-market, three-bedroom apartment in areas commonly inhabited by international executives in Singapore — typically in central areas — is now US$4,233 ($6,069), a 1.4% jump from 2019.
Lee Quane, regional director of Asia at ECA International, attributes this to an increase in overseas relocation to Singapore over the past 12 months, particularly in the fintech and pharmaceutical sectors. The firm has seen expats flocking from Hong Kong to Singapore, due to the relative stability of the latter.
However, recent “tighter restrictions on work permits for overseas workers have now counteracted this somewhat”, Quane says, noting that Singapore is “still only the ninth most expensive location in Asia for overall rental costs, coming behind cities such as Shanghai, Mumbai and Seoul”.
The research findings were based on the average rental prices for a three-bedroom apartment in the mid-range of the expatriate market.
Hong Kong is still the most expensive location for expat accommodation, clinching top place for the third year in a row. The average monthly rent in the city has increased by 3.45% to US$11,318 from 2019.
Despite this, Quane notes that the rise was still lower than the 4.9% jump in rents that was seen in 2018. “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,” he says.
Hong Kong’s high rents are due to a number of factors — the high population density of the territory and limited opportunities to build new homes, which drive rental costs upwards.
Meanwhile, cities in China saw varying rental trends over the past year. Shenzhen saw the largest increase of 7.2%, while Beijing’s rents remained fairly static, with the capital city staying in 19th place globally.
“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% per year since 2013,” he remarks.
Quane expects that the rental market could be more stable in the years to come, with the local government making efforts to increase the availability of land for new property construction.
Over in Taipei, Taiwan’s capital city, rents increased steeply by 5.29% from 2019’s levels, which moved the city into the top 50 most expensive locations for expat accommodation.
Quane attributes this jump to two factors: first, the award of government contracts for a major offshore wind power project has attracted expats to the city; and second, demand for rentals has risen as many locals continue to rent in anticipation of future drops in the housing market, a market sentiment widely reflected after years of unsustainable rises to property prices in the city.
In Australia, all cities saw a drop in rent except for Canberra. Sydney, the country’s largest city, saw one of the biggest drops in average rent.
Between 2018 and 2019, Sydney’s previously growing rental market took a turn as prices fell. “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,” Quane explains.
Across the Pacific, nearly all US cities have risen in rankings. The US now boasts three cities in the top ten — New York, San Francisco and Miami.
Quane pins this to the strong performance of the currency, as the US dollar has gained against most major world currencies.
There are also localised reasons for the jump in expat rents, driven by movements in companies. Biotech and pharmaceutical industry sectors in Boston have drawn expatriates to the city in large numbers, observes Quane. In New York, lower-than-expected rental increases happened after Amazon withdrew their plans to establish a second headquarters in Queens, he notes.
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