Singapore Ranks 15th in World Accommodation Costs

Singapore is currently the eighth most expensive city in Asia and 15th in the world for renting accommodation in prime areas, according to a recent survey of three-bedroom apartment rental prices conducted by ECA International. Furthermore, five of the top 10 most costly cities around the world are in Asia: Hong Kong and Tokyo, the world’s top two, Seoul (fifth), Mumbai (seventh) and Shanghai (eighth).

In the latest data compiled for 2006, a three-bedroom apartment in Singapore’s popular expatriate areas costs approximately US$3,364 per month on average. This is 15% higher than in 2005, when the equivalent apartment would have cost approximately US$2,915, and marked one of the highest percentage increases in Asia, behind Manila and Bangkok.

“Following a slump in the market, due in part to the effects of the 2003 SARS-related economic downturn and partly to an oversupply of high-end properties, rental prices in Singapore are now rising,” explains Lee Quane, General Manager of ECA International Hong Kong. “The demand for high-end accommodation has risen, driving up rental prices, which can be partly explained by companies expanding their operations in Singapore together with government initiatives to attract skilled workers from overseas.”

Although rising, rental prices in Singapore are still 150% cheaper than the average rental price in Hong Kong and 120% cheaper than Tokyo. However, rental rates are not always a direct reflection of general property prices.

“High rental prices in Tokyo, New York, Seoul, Moscow, London and Paris largely reflect high living costs in these locations. However, Mumbai, Shanghai and Beijing suffer from a shortage of modern, well equipped properties that meet expatriate standards, so pushing prices up for those properties that do,” explained Quane, before commenting on what appeared to be an anomaly. “Caracas makes the top 10 as expatriates need to live in high-security compounds because it is a very dangerous place to live.”

According to the survey, Nairobi in Kenya is the cheapest city in the world to rent a three-bedroom apartment, with the average rent a third of that in Singapore. Charlotte, Atlanta and Dallas in the US, and the Turkish capital of Ankara make up the bottom five.

Comparing 57 locations worldwide for the past 10 years, rental prices have increased by 22% on average. However, Singapore, 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 by almost 50% between 1996 and 2006.

“In 1996 Singapore’s residential rental market was booming," Quane said. “However, the 1997 the Asian Financial Crisis resulted in a general reduction in the demand for high-end housing, causing rental prices to drop. In recent years, however, we’re seeing a steady rise in rental prices which are likely to continue to increase.”

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

“Ten years ago, prices in Beijing and Shanghai were artificially inflated due to a severe lack of supply and restriction on property ownership and where foreigners could reside,” explains Quane. “Today, however, foreigners are allowed to live wherever they like and more high-end properties are being built.”

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 have seen many new high-standard properties erected, driving up the average rental price.

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.

Top apartment rental prices
1. Hong Kong
2. Tokyo, Japan
3. New York, USA
4. Moscow, Russia
5. Seoul, Korea Republic
6. London, UK
7. Mumbai, India
8. Shanghai, China
9. Caracas, Venezuela
10. Paris, France
11. Beijing, China
12. Ho Chi Minh City, Vietnam
13. Istanbul, Turkey
14. Dubai, UAE
15. Singapore
 

Note: Table based on prices rentals of a three-bedroom apartment in prime, ‘expatriate’ areas.