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Hong Kong, the world's most expensive city for rental accommodation according to new ECA International survey

( Five of the top 10 most costly cities to rent globally are in Asia.
Hong Kong is the world's most expensive city to rent accommodation and Asia accounts for five of the world's top ten most costly cities, according to a survey conducted by ECA International, the world's leading knowledge and solutions provider for international HR professionals.

Undertaken annually, ECA’s Accommodation Survey compares rental prices in 92 locations worldwide. The survey data is used in ECA’s Accommodation Reports, which are used by ECA Member companies to calculate housing policy and allowances for their internationally mobile staff.

"Comparing the cost of renting an unfurnished three bedroom apartment, ECA’s data shows that Hong Kong is by far the most expensive city, with an apartment in a popular expatriate area costing approximately US$8,592 per month on average," said Lee Quane, General Manager of ECA in Hong Kong. “That's 17 per cent more expensive than the average rental price in Tokyo, which ranked second in the survey, and 150 per cent more expensive than 15th placed Singapore."

High rental prices in the SAR can be attributed to a number of factors, including the lack of space putting a high premium on land and government intervention, as well as an increasing demand for high-end developments as many financial firms strengthen their presence within the city.

“What’s more, the survey shows that rental prices are rising – up 10% from 2005,“ comments Quane. “And with prices in Tokyo increasing by just 1% year on year, the gap between Asia’s two most expensive cities to rent is actually widening.”

Five of the top 10 most expensive locations in the world are in Asia, with Seoul (5th), Mumbai (7th) and Shanghai (8th) joining Hong Kong and Tokyo . New York, Moscow, London, Caracas and Paris make up the 10 most expensive cities globally to rent a three bedroom apartment.

High rental prices in Tokyo, New York, Seoul, Moscow, London and Paris largely reflect high living costs in these locations, while Mumbai, Shanghai and Beijing suffer from a shortage of modern, well equipped properties that meet expatriate standards, pushing prices up for those properties that do. Caracas makes the top ten as expatriates need to live in high security compounds because it is a very dangerous place to live.

According to the survey, Nairobi is the cheapest city in the world to rent a three bedroom apartment, with the average monthly rent nearly eight times cheaper than the equivalent in Hong Kong. Charlotte, Atlanta and Dallas in the US and Ankara make up the bottom five cheapest cities to rent.

Ten year trends

Comparing 57 locations worldwide for the past 10 years, rental prices have increased by 22% on average. However, Hong Kong, along with a number of other locations in Asia and worldwide, has actually seen a decrease in rental prices over this period, with the average price of renting a three bedroom apartment falling 10 per cent between 1996 and 2006.

“In 1996 Hong Kong’s residential rental market was booming," comments Quane. “However, government attempts to cool the market by boosting supply, coupled with the Asian Financial Crisis and dot-com crash, resulted in a steady fall in rental prices. In recent years, however, a recovering economy and higher demand for high-end accommodation are driving rental prices up back toward the peak of ten years ago, ” Quane adds.

Although rental prices in Beijing and Shanghai are amongst the highest in the world, they are also cheaper than ten years ago. The average cost of renting a three bedroom apartment is 50% cheaper in Beijing than 10 years ago, while in Shanghai they are now 40% less costly.

“Ten years ago prices in Beijing and Shanghai were artificially inflated due to a severe lack of supply, which meant that foreigners had to live in foreign approved residences,” explains Quane. “Today, however, foreigners are allowed to live wherever they like and more and more expatriate-standard properties are being built,” adds Quane.

Some of the most significant increases in recent years have been in the Middle East, with rental prices in Doha and Dubai rising by approximately 130% and 100%, respectively, since 1996. These locations are positioning themselves as premium business centres and luxury cities, and as such have seen many new very high standard properties erected, driving up the average rental price.

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