US$5,570 per month going rate trails only those of HK, Tokyo.
Thu, Feb 23, 2012
The Business Times
By Michelle Tan
BEING labelled a 'city of costs' is no misnomer for Singapore, which ranks third in Asia's most expensive locations to rent a three-bedroom apartment - with typical rents estimated to set one back by about US$5,570 per month, according to ECA International.
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However, Singapore's rental growth in domestic dollar terms has remained conservative in the past year, with average rents for an unfurnished three-bedroom apartment rising 3 per cent, placing it among the lowest in the region and a stark contrast to the previous year when rents rallied by over 10 per cent.
Said Lee Quane, regional director of ECA International, Asia: 'Singapore's strong economic recovery following the downturn in 2008 has seen expatriate numbers increase significantly over the last two years. However, a number of new property developments in the market has led to pressure on rental property availability easing over the last year. This has resulted in only modest rent rises.'
But when the effect of a stronger Singapore dollar is thrown into the picture, the whole ballgame changes.
For instance, US companies that send their employees on international assignments to Singapore may face a greater cost impact if currency movements go against their favour.
'In Singapore, rents have risen by just 3 per cent in local currency, but the strength of the Singapore dollar means that when we convert these prices into US dollars for comparison, the increase stands at 15 per cent,' explained Mr Quane.
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At a regional level, rents for three-bedroom apartments in Asia have risen by 5 per cent in local-currency terms over the last 12 months and 10 per cent in US-dollar terms.
This translates to average rents of about US$3,680 a month in Asia, almost 20 per cent higher than the global average of US$3,080.
Hong Kong remains at the top of the list for Asia and the world with an average rent for an unfurnished three-bedder unit coming in at around US$11,813 per month.
'This is a 15 per cent increase over the past year in local-currency terms and double the amount it costs to rent a similar property in Singapore,' said ECA.
Mainland China locations have seen the sharpest increases in Asia as the influx of international assignees continue to spur demand for rental properties there. In addition, with home prices continuing to dig for a bottom in China, many locals have chosen to ride with the rental option for now.
Tokyo has registered the greatest dip in rents on the back of lower international assignee numbers following the 2008 global financial crisis and more recently, the tsunami and nuclear disaster.
'This means there is less demand for rental property in expatriate areas, and rents in those areas have steadily fallen since then, dropping almost 5 per cent in yen terms,' said Mr Quane.
This article was first published in The Business Times.
