Post by Cindy Trinidad on Apr 18, 2009 9:40:44 GMT 8
Expatriate rental property costs – Mercer global survey and city rankings
Philippines, 14 April 2009
Asian cities dominate the world’s top 10 costliest locations for expatriate rental property, according to a study by Mercer of housing costs and practices for employees sent on overseas assignments. Outside Asia, New York, Geneva and London also appear near the top of the ranking while Moscow holds the number one position.
From a survey of 300 cities across the world Mercer has produced a rental property index of the 50 most popular cities for expatriate assignments. The research provides multinational companies with financial information on rental prices for their expatriate employees in major commercial centres. Data is based on typical rents for 1-4 bedroom apartments and 3-4 bedroom houses, furnished and unfurnished.
New York is used as the base city, with a score of 100 points. Moscow at the top of the ranking scores 168.30 while Johannesburg, at position 50, is substantially less costly with a score of 31.50. As the index is based on cost comparisons using the US dollar, currency exchange rates have an influence on the rankings.
Marie-Laurence Sépède, senior associate and research manager at Mercer, commented, “The world’s housing markets have been sliding since 2008, and strong currency fluctuations in the past few months have also had a strong impact on the comparative cost of expatriate housing. The value of the Euro has dropped by around 12 percent against the US dollar since September last year, while the Polish zloty, Mexican peso, Australian dollar, Brazilian real and the British pound have all lost more than 30 percent in value against the dollar during the same period.
ASEAN
Singapore maintains its top 10 ranking among the world’s most expensive cities for expatriate housing, but drops one place to 10th due to weakening demand. ASEAN cities have become relatively more expensive compared to the rest of the world with Jakarta, Kuala Lumpur, Manila and Bangkok all climbing up the rankings. Jakarta rises seven places from 41st to 34th, Manila moves up five places from 45th to 40th, Bangkok climbs four places from 48th to 44th and Kuala Lumpur picks up one position to 36th. Puneet Swani, Mercer’s Head of Information Product Solutions for ASEAN commented: “Higher rankings do not necessarily indicate that property prices have increased. Apart from Singapore, rental prices in most ASEAN cities have in fact remained the same or decreased marginally. They remain comparatively stable compared to sharp falls in American and European cities, which accounts for the relatively higher rankings of ASEAN cities this year. Singapore’s drop in ranking is a reflection of a strong decline in property prices, hardest hit in the ASEAN region by the current economic crisis.”
“Despite falling property rental costs in most of ASEAN, the difficult economic situation will still likely result in an overall decrease in expatriate assignments across the region. That said, ASEAN as a region continues to grow and remains a relatively good area for multinationals to invest and grow their business during this downturn.”
Mr Swani added: “It will be interesting to see what 2010 brings for the housing market in ASEAN, but if current conditions are any indication, we may see Singapore continue to move down, with other ASEAN countries either maintaining the same position or moving up marginally in ranking”.
Asia Pacific
Asia dominates the top 10 most expensive cities for expatriate properties. Tokyo (156.10) is the second most expensive rental city for expatriates globally – up from 3rd place in 2008 due to an appreciation of around 17 percent in the value of the yen against the dollar since September 2008. Hong Kong moved down one place to third position (142.10) due to rental prices decreasing as a result of reduced demand from the economic slowdown. Besides ASEAN, Asian cities moving up the ranking table include Beijing, which moved up four positions to 6th place (98.30) with its rental prices stable and its currency linked to the US dollar. Mumbai at position 4 (105.10), New Delhi at 8 (96.60) and Bangalore at 29 (51.80) continue to receive interest and demand for expatriate rental property.
Other cities in the region have experienced notable changes in the ranking for a number of reasons: their currency is linked to the US dollar or the prices for expatriate rentals are quoted in US dollars, and there is an oversupply of accommodation. In Vietnam, Ho Chi Minh City is up 11 places to 23rd position (55.10). Seoul at position 16 (73.30) has dropped five places with a devaluation of the Korean won by nearly 30 percent, while Jakarta is up 7 positions to 34 (score 49.50).
Sydney is still the most expensive city for rental property in Australia but it has dropped seven places to 32nd position (49.70) with the Australian dollar experiencing a loss of around 30 percent against the US dollar.
Europe
Moscow (score 168.30) is ranked the most expensive city for rental prices in Europe and globally for 2008. London has moved down five places and is now in 9th position, scoring 95.60 and is the third highest ranking European city after Geneva which scores 96.80. As well as the British pound’s decline in value against the US dollar, London residential rents are now falling as the supply of rental property increases.
Other European cities in the top 20 include Paris in 13th place (77.20), Kiev at 14 (75.50), Milan at 15 (75.40) and Copenhagen at 20 (61.10). Warsaw has dropped 13 places to position 31 (score 50.80), driven the zloty’s strong devaluation against the dollar.
Middle East and Africa
Dubai has the most expensive rental prices in the Middle East, in 12th place with a stable score of 82.50 over the last six months. The United Arab Emirates dirham is pegged to the US dollar, and the real estate market, though facing some difficulties, has not yet experienced a major fall in rental prices. However, this is expected to happen in the coming months as the global economic crisis impacts this region.
Jeddah in Saudi Arabia is ranked 47(37.80) and has moved up three places since September 2008. Cairo has moved up seven places to position 37(47.00). Johannesburg is ranked 50 (31.50) with about 30 percent of the rand’s value lost against the dollar in the last few months.
The Americas
In the United States the rental market within some cities is resilient and rental prices across the country are increasing. New York City in 5th position has moved up 2 places (100.00) while Los Angeles ranks 17th place (score 72.60).
“The growing number of foreclosures is forcing more people to look for apartments and houses to rent. However, we expect rental prices to decrease as unemployment and other economic factors begin to influence the market,” Mrs Sépède commented.
Most cities in South America have dropped in the ranking with Sao Paulo moving from 16th to 27th place (53.40) and Rio de Janeiro moving from 20th to 35th place (49.40), impacted by the near 50 percent devaluation of the Brazilian real against the US dollar. Caracas (68.00), ranked 18th, is now the most expensive city in the region followed by Bogota in 22nd position (58.00), while Mexico City in 49th position (score 37.50) has dropped 11 places since 2008. Buenos Aires is up from 47 to 42nd place (score 42.00).
“In recent months, much of the movement in the rankings can be attributed to currency fluctuations. Looking ahead over the next few months, we would expect to see a general decline in rental prices due to the economic slowdown. Multinational companies should closely monitor these changes in the markets so as not to lose out on opportunities for cost savings,” commented Mrs Sépède.
Philippines, 14 April 2009
Asian cities dominate the world’s top 10 costliest locations for expatriate rental property, according to a study by Mercer of housing costs and practices for employees sent on overseas assignments. Outside Asia, New York, Geneva and London also appear near the top of the ranking while Moscow holds the number one position.
From a survey of 300 cities across the world Mercer has produced a rental property index of the 50 most popular cities for expatriate assignments. The research provides multinational companies with financial information on rental prices for their expatriate employees in major commercial centres. Data is based on typical rents for 1-4 bedroom apartments and 3-4 bedroom houses, furnished and unfurnished.
New York is used as the base city, with a score of 100 points. Moscow at the top of the ranking scores 168.30 while Johannesburg, at position 50, is substantially less costly with a score of 31.50. As the index is based on cost comparisons using the US dollar, currency exchange rates have an influence on the rankings.
Marie-Laurence Sépède, senior associate and research manager at Mercer, commented, “The world’s housing markets have been sliding since 2008, and strong currency fluctuations in the past few months have also had a strong impact on the comparative cost of expatriate housing. The value of the Euro has dropped by around 12 percent against the US dollar since September last year, while the Polish zloty, Mexican peso, Australian dollar, Brazilian real and the British pound have all lost more than 30 percent in value against the dollar during the same period.
ASEAN
Singapore maintains its top 10 ranking among the world’s most expensive cities for expatriate housing, but drops one place to 10th due to weakening demand. ASEAN cities have become relatively more expensive compared to the rest of the world with Jakarta, Kuala Lumpur, Manila and Bangkok all climbing up the rankings. Jakarta rises seven places from 41st to 34th, Manila moves up five places from 45th to 40th, Bangkok climbs four places from 48th to 44th and Kuala Lumpur picks up one position to 36th. Puneet Swani, Mercer’s Head of Information Product Solutions for ASEAN commented: “Higher rankings do not necessarily indicate that property prices have increased. Apart from Singapore, rental prices in most ASEAN cities have in fact remained the same or decreased marginally. They remain comparatively stable compared to sharp falls in American and European cities, which accounts for the relatively higher rankings of ASEAN cities this year. Singapore’s drop in ranking is a reflection of a strong decline in property prices, hardest hit in the ASEAN region by the current economic crisis.”
“Despite falling property rental costs in most of ASEAN, the difficult economic situation will still likely result in an overall decrease in expatriate assignments across the region. That said, ASEAN as a region continues to grow and remains a relatively good area for multinationals to invest and grow their business during this downturn.”
Mr Swani added: “It will be interesting to see what 2010 brings for the housing market in ASEAN, but if current conditions are any indication, we may see Singapore continue to move down, with other ASEAN countries either maintaining the same position or moving up marginally in ranking”.
Asia Pacific
Asia dominates the top 10 most expensive cities for expatriate properties. Tokyo (156.10) is the second most expensive rental city for expatriates globally – up from 3rd place in 2008 due to an appreciation of around 17 percent in the value of the yen against the dollar since September 2008. Hong Kong moved down one place to third position (142.10) due to rental prices decreasing as a result of reduced demand from the economic slowdown. Besides ASEAN, Asian cities moving up the ranking table include Beijing, which moved up four positions to 6th place (98.30) with its rental prices stable and its currency linked to the US dollar. Mumbai at position 4 (105.10), New Delhi at 8 (96.60) and Bangalore at 29 (51.80) continue to receive interest and demand for expatriate rental property.
Other cities in the region have experienced notable changes in the ranking for a number of reasons: their currency is linked to the US dollar or the prices for expatriate rentals are quoted in US dollars, and there is an oversupply of accommodation. In Vietnam, Ho Chi Minh City is up 11 places to 23rd position (55.10). Seoul at position 16 (73.30) has dropped five places with a devaluation of the Korean won by nearly 30 percent, while Jakarta is up 7 positions to 34 (score 49.50).
Sydney is still the most expensive city for rental property in Australia but it has dropped seven places to 32nd position (49.70) with the Australian dollar experiencing a loss of around 30 percent against the US dollar.
Europe
Moscow (score 168.30) is ranked the most expensive city for rental prices in Europe and globally for 2008. London has moved down five places and is now in 9th position, scoring 95.60 and is the third highest ranking European city after Geneva which scores 96.80. As well as the British pound’s decline in value against the US dollar, London residential rents are now falling as the supply of rental property increases.
Other European cities in the top 20 include Paris in 13th place (77.20), Kiev at 14 (75.50), Milan at 15 (75.40) and Copenhagen at 20 (61.10). Warsaw has dropped 13 places to position 31 (score 50.80), driven the zloty’s strong devaluation against the dollar.
Middle East and Africa
Dubai has the most expensive rental prices in the Middle East, in 12th place with a stable score of 82.50 over the last six months. The United Arab Emirates dirham is pegged to the US dollar, and the real estate market, though facing some difficulties, has not yet experienced a major fall in rental prices. However, this is expected to happen in the coming months as the global economic crisis impacts this region.
Jeddah in Saudi Arabia is ranked 47(37.80) and has moved up three places since September 2008. Cairo has moved up seven places to position 37(47.00). Johannesburg is ranked 50 (31.50) with about 30 percent of the rand’s value lost against the dollar in the last few months.
The Americas
In the United States the rental market within some cities is resilient and rental prices across the country are increasing. New York City in 5th position has moved up 2 places (100.00) while Los Angeles ranks 17th place (score 72.60).
“The growing number of foreclosures is forcing more people to look for apartments and houses to rent. However, we expect rental prices to decrease as unemployment and other economic factors begin to influence the market,” Mrs Sépède commented.
Most cities in South America have dropped in the ranking with Sao Paulo moving from 16th to 27th place (53.40) and Rio de Janeiro moving from 20th to 35th place (49.40), impacted by the near 50 percent devaluation of the Brazilian real against the US dollar. Caracas (68.00), ranked 18th, is now the most expensive city in the region followed by Bogota in 22nd position (58.00), while Mexico City in 49th position (score 37.50) has dropped 11 places since 2008. Buenos Aires is up from 47 to 42nd place (score 42.00).
“In recent months, much of the movement in the rankings can be attributed to currency fluctuations. Looking ahead over the next few months, we would expect to see a general decline in rental prices due to the economic slowdown. Multinational companies should closely monitor these changes in the markets so as not to lose out on opportunities for cost savings,” commented Mrs Sépède.