Accommodation: ECA Global Perspectives

Accommodation
ECA Global Perspectives

Contents
Introduction
Comparing rents around the world
Annual changes in rents
Regional analyses
Asia
Western Europe
Central and Eastern Europe
North America
Latin America
Middle East and Africa
Australia and New Zealand
Comparison of worldwide utilities costs
About this report
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ECA Global Perspectives Accommodation
2
Introduction
Careful consideration of
accommodation policy is integral to
creating an appropriate international
assignment package.
The right choice of housing for an employee can
play a significant role in determining the success of
an assignment, and contributions towards the costs
of accommodation will form a large proportion of
any remuneration package. Developing a good
understanding of the factors that influence where
expatriates tend to live, and being appraised of the
high costs associated with this accommodation,
are essential preparation.
While the quality of accommodation available in a
particular area of a city will contribute towards that
areas suitability, other factors are also important.
Proximity to primary business districts, embassies,
international schools, open spaces or social focal
points can all lead expatriates to that district, and
a concentration of expatriates will in itself attract
more. Districts that have proved popular for one
or more of these reasons will largely continue to
attract expatriates over time, although the
distribution of expatriates within a city can change
as civic redevelopment or the construction of new
high-standard accommodation makes other
neighbourhoods attractive.
In some areas, security is of paramount importance.
In many locations around the world, secure expatriate
accommodation is restricted to areas away from the
city centre, in enclosed communities and comes with
a premium. Generally, this type of accommodation
is favoured by companies as the alternatives, if
available at all, can involve separate provision of
extensive and expensive security measures.
As well as the quality and location of properties,
the size of accommodation is an important
consideration. There are often regional variations
in property size and type, and therefore significant
differences in the number of people a certain
property type will comfortably house. A two
bedroom apartment in Tokyo, for instance, may
only be big enough to reasonably accommodate
one person. In some major US cities, on the other
hand, a two bedroom apartment will typically be
more generously proportioned and could house a
family of three or four.
For many of the reasons given above, the cost of
accommodation while on assignment can be very
high. Over 90% of companies responding to ECAs
2011 Expatriate Salary Management Survey stated
that they contribute towards the cost of an
assignees host country accommodation. Most of
these companies aim to cover rental costs in full, up
to a specified ceiling. Associated accommodation
costs such as maintenance charges and utility costs
are often provided for in addition to monthly rents.
Where the property is unfurnished, the additional
costs of shipping the assignees furniture or
sourcing suitable furniture locally will also need to
be taken into consideration. Another factor to
consider is seasonality. Advertised rents for
properties can fluctuate, and are typically higher
just before the beginning of the scholastic year as
local people and expatriates compete to move in
before the start of term.
Employment Conditions Abroad Ltd 2012
3
Even when a contribution towards housing is
made by the employee, accommodation costs will
account for a high proportion of an assignment
package. More than half of companies responding
to the same survey also bear any additional tax due
on benefits including housing, further increasing
the total cost of an assignment. Allowances
provided for accommodation are almost always
taxed in full; concessions may exist in some
countries where the employer provides the benefit
directly by leasing the property on the employees
behalf, for example.
Multinationals with small expatriate populations
tend to have a less structured approach to dealing
with housing budgets, and can afford to have
more flexible attitudes, but it is still important to
factor in housing costs early in the assignment
salary package design. Companies with large
numbers of expatriates need to have a more
structured system for setting suitable allowances
and often create policies which make provision for
different sizes and types of accommodation
according to family size, seniority and location.
ECAs accommodation reports are designed to
facilitate both approaches.
This Global Perspectives report compares data for
118 cities in 67 of the countries for which ECA
produces detailed accommodation data, using the
average rental costs for three-bedroomed
apartments around the world. It looks at the factors
responsible for the wide range of accommodation
costs seen from location to location and examines
how rents have moved in recent times, investigating
common reasons for these sometimes extreme
changes, before looking at regions around the
world in greater detail.
All the information contained in this report has
been taken from ECAs location-specific
Accommodation reports, available as part of a
subscription to ECA or on an ad-hoc basis from
the online shop at www.eca-international.com.
Even when a contribution towards housing is made by the
employee, accommodation costs will account for a high proportion
of an assignment package
The figures referred to in this report are taken from ECA Internationals latest Accommodation survey. Conducted
during late 2011, it forms a snapshot of the global expatriate housing market as of September 2011. Where
applicable, currency conversions have been made using an average of the exchange rates published by the Financial
Times during the period 23rd August 6th September 2011.
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Properties may be furnished or unfurnished according to typical provision for this type of apartment in the cities shown. Service charges
have been included where these are typically covered by the rent. Utilities costs have not been included except in rare circumstances
where they are included in the rent.
5
Commentary overleaf

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This analysis compares average monthly rents for mid-range three bedroom apartments in major cities worldwide
(one per country), from ECA Internationals latest global Accommodation survey. To aid comparison all rents have
been converted to USD.
6
Rental costs of expatriate
accommodation vary widely from
location to location, as this comparison
of monthly costs for three-bedroom
apartments around the world shows.
Whereas the average cost of renting a three-
bedroomed apartment in Hong Kong is USD 11 800
per month, a mid-range property of comparable
quality in Karachi costs 33 times less at a modest
USD 360. There are many factors that contribute
to these large variations, and these are outlined
here and examined more closely in the following
regional analyses.
It may come as little surprise that the top five
places in ECAs ranking are filled by the densely
populated business hubs of Hong Kong, Tokyo,
Moscow, New York and London. In such large
metropolitan areas, properties within reach of
business and financial districts are centrally located
and highly sought after. With land space at such a
premium in these central areas, demand inevitably
outstrips the supply of available properties. With
little room for expansion, and strong recent
performance in the financial markets, Hong Kong
looks set to retain its position as the most
expensive place for assignees to rent for some
time. By contrast, and with the exception of
Dubai, major destinations in the Middle East are
not constrained by available land, and they rank
among the more affordable locations in our survey.
Personal security levels in cities can have a major
influence on rental costs. Security is a high priority
in Caracas, Bogota and Lagos, and expatriate
accommodation features enhanced security
measures by necessity, lifting rental rates in these
cities. With the highly performing petroleum and
oil industries in Nigeria and Venezuela keeping
expatriate numbers at high levels, sustained
demand for secure accommodation in these
locations is likely to keep rental costs high for the
foreseeable future.
7
Established business centres, such as the European
capitals of Rome, Paris and London have long
attracted foreign investment and therefore have
housed expatriates for many years, often creating
areas favoured by particular nationalities and
generating their own market rates, evidenced in
their high ranking. By contrast, business interest in
many Eastern European locations such as Ljubljana,
Bratislava and Sarajevo is far more recent, and their
respective housing markets are less mature.
Average rents for these locations are among the
cheapest in the world.
Rental costs in North America and Australia have
recently been pushed higher by stagnation in the
sales markets. In the USA, in particular, more
stringent requirements for mortgages following the
collapse of the sub-prime market, have meant that
considerably more people are renting than buying,
squeezing the market.
Many of the cities at the upper end of the chart are
also renowned for being expensive places in which
to purchase day-to-day goods and services. Tokyo
and Zurich, for example, are among the top five
most expensive cities in the world for everyday
cost of living, and also feature in the top ten of our
accommodation rankings. Karachi is the cheapest
location in both ECAs accommodation and cost of
living survey. General living costs can be a useful
indicator of the likely cost of accommodation,
although this is not always the case; the day to
day cost of living in India is one of the lowest in
the world but the cost of renting an apartment in
Mumbai is very high, putting it in the top twenty
most expensive. This pattern is repeated in many
major Indian cities as a lack of availability of high-
standard accommodation leads to demand
pressures, driving rents upwards.
General living costs can be a useful indicator of the likely cost of
accommodation, although this is not always the case
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9
Commentary overleaf
This analysis compares annual changes in average rents for mid-range three bedroom apartments in major cities
worldwide (one per country), from ECA Internationals latest global Accommodation survey.
10
While some major cities around the
world have experienced large increases
in rents for expatriate accommodation,
many more have been stable, with
prices moving by less than 5% over
the year.
Barring a few exceptions, most major markets in
Western Europe showed minimal rental movement
during our latest analysis. Major cities in the
Netherlands, Germany and France are among
these as economic stability kept demand for
expatriate properties consistent. Rents in
Switzerland and Italy were also largely static.
Economic performance often dictates the pace of
change in rents from city to city, with successful
locations seeing increased investment and rising
expatriate demand. Traditionally crowded
accommodation markets often see these effects
exaggerated further, and they can be clearly seen
in the cases of Hong Kong and London. As
investment in the petroleum industry continues in
Venezuela, demand is soaring in the capital of
Caracas, leading it to show the steepest increases
in our latest analysis. Kenya, too, is developing as
a major hub for companies doing business in
Africa, and availability of accommodation is still
insufficient to meet demand, putting it at the top
end of this table. Favourable economic conditions
also led to increases across many Asian locations,
including major Chinese cities, where rents rose
on average by 7%.
While some economies have performed well,
others have struggled. This is reflected in falling
rents in Portugal, Spain and Greece where
expatriate demand continues to stagnate. High
levels of unemployment in Bratislava have reduced
demand significantly across the accommodation
market, and the city saw the largest fall in rents of
our survey over the twelve month period. In the
Middle East, expatriate demand for high-end
property is yet to equal the high levels of availability
in both Abu Dhabi and Dubai. Rents in the UAE
have been decreasing for over two years. However,
the rate of decline is now slowing and rents are
expected to stabilise in the coming years.
ECAs survey also highlights other factors that can
lead to significant changes in accommodation
markets. For example, political unrest in Cairo and
Manama led to many expatriates being either
withdrawn from these locations, or migrating
away from districts near political unrest. Average
rents fell in both these locations as a result.
Natural disasters and their after-effects led to
some of the more drastic movements in the rental
costs. Significant property construction is still
required in Santiago following the destruction of
many buildings in the Chilean earthquake of 2010.
Annual rental increases there of approximately
25% were among the highest seen for apartments
worldwide. Conversely, rents fell in Tokyo during
2011 as expatriates withdrew from Japan in
significant numbers following last years tsunami.
Despite these decreases Tokyo still finds itself the
second-most expensive accommodation location
in our survey.
11
12 Employment Conditions Abroad Ltd 2012
13
Regional analyses
Key information for finding and renting
suitable accommodation
Asia
Western Europe
North America
Latin America
14
18
22
26
38
30
34
14
Asia
Costs and trends
In a continent as large and diverse as Asia, it is not
surprising that there is enormous variation in the
rental costs between its cities. Asia is host to the
two most expensive cities in the entire survey,
Hong Kong and Tokyo, but also the cheapest,
Suzhou and Karachi. The monthly cost of renting
a three bedroomed apartment in Hong Kong is
nearly USD 12 000, over 30 times more expensive
than the cost of renting the equivalent in Karachi.
Despite this large disparity, there are common
themes running through the expatriate rental
markets in many of the Asia locations surveyed.
At least ten of them could be classified as
megacities, densely populated metropolitan areas
with more than 10 million inhabitants, where
land is at a premium. The availability of suitable
property for expatriates is limited, due either to a
shortage of housing in general or of good standard
accommodation in particular. The cost of renting
these properties is therefore sensitive to fluctuations
in expatriate numbers; falls in rent were seen
across the region in 2009 as companies sought to
reduce expatriate numbers and costs following
the global financial crisis, but rents have risen
since improving confidence in the economy has
caused expatriates to return.
Rental prices have risen the most in Hong Kong,
which remains an important global financial hub
and a popular base for companies looking to
engage in business with mainland China.
Competition for rental properties increased as
residential sales dropped following the introduction
of Special Stamp Duty, a charge on properties sold
within 24 months of purchase introduced in late
2010 to curb short-term speculation on the property
market. Demand also increased following the
March 2011 tsunami in Japan, as many expatriates
in the greater Tokyo area were evacuated to Hong
Kong. This exodus saw rental prices fall by 4.9%
over 12 months in Tokyo, the largest decrease in
the region, although prices there remain high.
China continues to be a major destination for
international assignees, ensuring that rental
accommodation of high quality is always in
demand and vacancy rates remain low. In Suzhou,
for example, nearly all the accommodation suitable
for expatriates is within the Industrial Park and the
Hi-Tech Industrial Development Zone where a large
number of international companies are located.
Whilst construction of more accommodation is
on-going, supply is currently unable to keep up
with demand. Rents in the Chinese cities in our
survey increased by 7% on average and are set to
increase further as foreign investment continues to
flow and a raft of restrictions on the sale of property
introduced in late 2010 to bring house prices under
control brings more people into the rental market.
Increasing expatriate numbers are also driving up
prices for high quality rental accommodation in
India, home to two of the 20 most expensive cities
in the world for housing despite being the third
cheapest country in the region for day to day living
costs (after Vietnam and Pakistan). Once again it is
a case of the supply of good quality housing on
the market being insufficient to meet the increasing
demand, although construction of more luxury
residential developments, infrastructure and
amenities to cater for expatriates continues. In
Indonesia too, the ever-improving economy has
increased expatriate demand in Jakarta and the
delivery of new supply to the market is struggling
to keep pace.
15
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Monthly rent Annual change in rent
16
Districts and housing
As expected in these highly urbanised and densely
populated cities, space is at a premium and
apartments are the more common way to house
expatriates, although houses are normally available
for those expatriates willing to live further from the
centre. Hong Kong is well known for its high-rise
apartments but areas further away from the centre,
like the New Territories and Lantau Island, are
increasing in popularity due to the rural atmosphere,
marginally lower rents, and availability of houses.
Beijing, New Delhi, Guangzhou, Shanghai, Bangkok,
Jakarta and Manila are all examples of cities where
expatriates cluster in gated communities located up
to 30km away from the Central Business District,
attracted by the larger properties and amenities
available, and in particular the presence of
international schools.
Ease of travel is an important consideration for
expatriates who choose to live outside central
areas. Tokyo offers an excellent metro system but
it is notoriously overcrowded at peak times. Many
other cities do not have public transport that is
adequate or safe. If a car or taxis are the only
practical means of getting around, traffic
congestion is a major issue in virtually all these
cities; a car journey to the centre of Bangalore
from Whitefield, 15km away, can take at least an
hour. Expatriates in Indonesia report car journeys
of up to an hour and a half to the centre of Jakarta
from Cilandak, a popular suburb just 6km from
the centre and favoured by expatriate families for
the schools located there.
Many of the apartment buildings and compounds
where expatriates live in Asian cities have 24 hour
security, although most of the locations surveyed
are generally regarded as safe places for expatriates
to live. Individual security guards for private homes
outside of compounds are recommended in
Jakarta, and in Manila expatriates are advised to
exercise caution when travelling around the city
due to a general rise in crime. Karachi is the only
surveyed city in the region where spacious houses
with gardens are the most commonly available
property for expatriates, although due to concerns
about personal safety they are advised to minimise
travel around the city and to follow stringent
security measures at home and work.
Leasing arrangements
Leases are usually of between one and two years
in length in Asia, with houses sometimes
commanding longer leases than apartments.
Karachi is an exception, as any lease over eleven
months long requires registration with the Rent
Controller and the law also restricts increases on
rents for the duration of the lease. As a result,
although longer tenancies are possible, landlords
tend to prefer shorter leases. The standard lease in
Bangalore is also eleven months for similar reasons.
It is possible to negotiate diplomatic clauses into
the rental agreement in some countries although
they only usually apply after the first twelve
months of tenancy.
Although rent is paid monthly in most locations,
tenants are generally required to pay the rent for
a year or even the entire lease period upfront in
Indonesia, Pakistan, the Philippines and South
Korea. This is also sometimes a requirement in
New Delhi and Mumbai. Elsewhere a security
deposit of between one and six months rent is
usually payable and there may be an additional
holding deposit of around a months rent which is
commonly credited towards the first rent payment.
Deposits are not required in Kazakhstan.
17
Brokerage fees are often charged and usually
amount to a months rent. They are generally paid
by the landlord in South East Asia, whereas in the
rest of the region they are paid by the tenant or split
between the tenant and landlord. Service charges
are mostly included in the rent but where they are
not they typically amount to 5-10% of monthly
rent. Housing taxes are not as common as in
other parts of the world and where they exist they
are usually payable by the landlord. However, the
tenant is required to pay stamp duty in Hong Kong
and Singapore (this is split with the landlord in
Hong Kong). In Japan, residents are subject to
ward tax or shiminzei, the level of which is based
on the tenants income in the previous year. The
first year or part year of residence until 1st January
in Japan is exempt from shiminzei.
In Indonesia, Vietnam and Kazakhstan rents are
advertised in US dollars but payment may be in
local currency.
More often than not rental properties in the region
are rented out furnished, particularly smaller
apartments. Properties are rented unfurnished in
Hong Kong and Japan but will usually include
kitchen appliances. Unfurnished properties are the
norm in the Philippines and India too but are
usually just bare units in these countries.
n Economic recovery in the region is
causing a rise in expatriate numbers,
and therefore demand for property,
increasing rents
n Asia houses the locations with the
highest and lowest rents worldwide
n Rental costs in Karachi are less than
3% of those for a comparable
property in Hong Kong
n Mumbai has a very low cost of living
but a very high cost of accommodation
n The exodus of expatriates from Tokyo
following the tsunami in 2011 caused
rents to drop
18
Western Europe
Costs and trends
The rental markets in the major cities of Western
Europe tend to be stable and there have been no
extraordinary rental movements since the last
survey, with only London and Stockholm seeing
double-digit increases. The four most expensive
cities in Western Europe are all major international
business hubs that also feature in the top 20 most
expensive cities in the world. There is always
demand for top quality accommodation in the
central areas of these cities, ensuring that rents
remain high.
London has seen the biggest increases in rents
since the previous survey and is also the most
expensive location. It costs nearly four times as
much to rent an apartment here than in the next
most expensive British city, Aberdeen, the centre of
Scotlands oil and gas industry. Strategically located
and offering a more favourable exchange rate than
has been the case for many years, central London
continues to attract wealthy expatriates keen to
invest in its property market. Criteria for obtaining
buy-to-let mortgages have eased for high-end
properties, and landlords are taking advantage of
significant increases in expatriate demand for
luxury accommodation. Continued rental growth is
anticipated for the next two to three years, albeit
at a more moderate pace.
The rental market is closely linked to the
performance of the sales market throughout the
UK, where it is common to aspire to home
ownership even though high property prices mean
that renting is the only viable option for many
residents, particularly in the capital. All the British
cities in the survey saw rental increases as a
recovery in the sales market led property investors
to market properties theyd previously been renting
out, with a subsequent reduction in available rental
properties leading to an increase in rents.
The Swedish rental market has also been subject
to fluctuations in the sales market. Increased sales
in Stockholm in 2010 tightened the supply of
rental properties and led to significant increases in
rental prices. Prices continued to increase in early
2011 but have since fallen back somewhat,
resulting in a modest annual change in average
rents across the city for houses. However, the
increases for premium apartments have been far
more pronounced.
In many other European countries (Germany,
Switzerland and Austria, for example), it is more
common for residents to rent than buy their
homes, and in longer-term lettings annual rental
increases linked to inflation may be stipulated in
the contract with greater stability in the rental
market as a result. German cities have seen the
greatest increases in rents outside the UK and
Nordic region; Germany is recovering from the
financial crisis better than other European
countries, so people continue to migrate to
German cities in search of work. The biggest
increases were in Hamburg where there is
sustained demand for rental properties but low
vacancy rates. Decreases have been seen in
countries struggling with sovereign debt crises, as
recession and job insecurity lead to migration away
from expensive central areas to cheaper suburbs.
Even so, the drops in rental prices in cities like
Madrid, Lisbon, Athens and Milan are moderate as
the availability of good quality property in popular
expatriate areas remains limited. In Italy local
people tend to buy and sell property rather than
rent and therefore rental prices are almost entirely
influenced by the demand created by the size of
the expatriate population.
19
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20
The majority of the cities surveyed in Western
Europe are large, densely populated or both,
which is evident in the type of accommodation
expatriates live in and the areas they prefer. In
most cities, apartments are the only option near
the city centre and expatriates looking for houses
need to reside in suburbs further out. Popular
expatriate suburbs are often clustered around
international schools, such as the western suburbs
of Paris, the areas south and west of Amsterdam
and the southern and eastern suburbs of Brussels.
Most areas popular with expatriates in the Swiss
cities are centrally located with good transport
links, but the accommodation available is almost
exclusively apartments; houses rarely come onto
the market and when they do are extremely
expensive. Brussels has possibly the best availability
for more centrally-located houses, with detached
properties widely available just 5km from the city
centre. Houses are also common close to the city
centre of comparatively tiny Luxembourg City, but
there is a limited supply of all types of housing
here which contributes to its relatively high rents.
Unless housing budgets are limitless, commuting to
the city from distant suburbs and satellite towns is
often the only realistic option to provide families
with a large house and garden. In London it is
common to commute from nearby counties with
good rail links like Surrey, 30km away, and in
Barcelona the towns of Castelldefels, Sitges and
Sant Cugat del Valles are all popular with expatriates
despite being 15- 40km from the city centre.
In many European cities the impact of traffic
congestion on commute time is a significant issue
to take into account when selecting an area to live,
although most Western European cities are well
served by extensive public transport systems.
Parking is often an issue and if required can be an
additional cost to consider. Off-street parking is
rare in inner London and most residents are
required to pay an annual fee to park on the street
outside their home. In Amsterdam, car ownership
is impractical as the waiting time for a parking
permit is several years.
Long leases are common in Western Europe,
generally varying in length between one and three
years with the option to renew but with indefinite
leases a possibility in some locations. In Belgium
the typical lease length is nine years but it can be
terminated early by giving at least three months
notice and paying a penalty of three months rent
in the first year of the lease, two months rent in
the second and one months rent in the third.
There is no penalty for early termination in the
fourth year and beyond. In Switzerland each canton
has its own regulations on renting and non-EU
nationals must reside in the canton which issues
their work permit. Application can be made to live
in a different canton if, for example, there is a need
to be near an international school or a partners
place of work.
In most countries diplomatic clauses can be
negotiated into the rental agreement, typically
requiring three months written notice to be given
to the landlord and possibly a penalty of a few
months rent or even, as in Germany, a requirement
to find a replacement tenant. Often a diplomatic
clause only applies after the first year of tenancy.
21
Another quirk of leasing in Germany is that it is
usually stated that the property be repainted at the
end of the agreement and sometimes the landlord
will insist this be done by an approved company.
Everywhere else an inventory should be done at
the beginning of the tenancy to take into account
any existing damage in the property and stipulate
the condition the property should be returned in.
Estate agents will usually charge a brokerage fee
which typically amounts to between one and three
months rent plus relevant tax. It varies across the
region as to whether this is paid by the landlord or
the tenant, or split between the two.
In most countries any housing taxes are paid by
the landlord, with tenants being responsible for
municipal taxes and TV/radio licences. However,
the tenant pays housing taxes or registration taxes
in Italy, France, Austria and the Irish Republic.
Where service charges are not included in the
rental cost, the rates vary between 5% and 15%
of the monthly rent.
Other than in the UK and the Irish Republic,
accommodation is almost always rented
unfurnished or partly furnished. Renting fully
furnished accommodation may increase the rent
by up to 30% or more. In most countries the
definition of unfurnished will include kitchen
units and appliances, although in Italy and France
little is provided in such properties beyond floor
coverings. There is no discernible difference in cost
between furnished and unfurnished property in the
UK and Ireland.
n Long leases in Western Europe help
keep rental costs stable
n Belgian leases are typically nine years
in length
n In Switzerland, non-EU nationals must
reside in the canton which issued
their work permit
n Properties in Germany often need to
be repainted by the tenant when
vacated
22
Costs and trends
Moscow is by far the most expensive city in the
Central and Eastern Europe region, with rents more
than double those of St Petersburg, the next most
expensive city. The figures disguise the fact that in
2009 the global financial crisis and collapse in oil
prices saw a contraction in the Russian economy and
an exodus of the expatriate population from both
these cities, causing dramatic falls in rents of up to
50%. Foreign interest in Russias vast reserves of oil
and gas and the associated increase in its citizens
wealth quickly returned to the country, however, and
demand for rental property for expatriates in both
cities has been increasing ever since. The traditionally
limited supply of suitable properties in Moscow is
being further squeezed by an increasing number of
wealthy Muscovites purchasing properties at the
luxury end of the market and an announcement
from city hall banning residential construction
within the Third Transport Ring, which demarks the
city centre where most of the areas popular with
expatriates are located.
The other cities surveyed in the region are much
smaller in both area and population than the two
Russian cities and have very different economies,
so it is not surprising that they have very different
rental markets. Although all cities saw a drop in
rental prices in 2009 following the financial crisis,
the falls in most cities were not as dramatic as in
Russia and the recovery not as rapid. In 2011 rents
continued to decline in Budapest, Bucharest and
Bratislava and only moderate increases were
recorded in Warsaw, Prague, Ljubljana, Vilnius and
Zagreb, less than the official inflation rate in most
cases. Bucharest and Bratislava have fared the
worst with rents decreasing 7.6% and 11.5%
respectively. When the recession hit Bratislava,
foreign investment dwindled and expatriate
numbers dropped but newly completed high-end
housing units built to meet the previously high
levels of demand were still coming on to the
market. These properties were not in high demand
from the domestic market either, due to high rates
of unemployment and a drop in real earnings as
inflation outstripped pay growth. This imbalance
of supply and demand has led to competition
between landlords to let their properties and a
significant drop in rents, especially at the high
end of the market.
Sarajevo may be the least expensive city in the
region but it has seen a 12.7% increase in rental
prices, one of the highest in the survey and three
times higher than inflation. A similar increase was
seen last year despite more subdued figures from
every other city in the region. The rises can be
attributed to increasing numbers of expatriates
and the construction of higher quality
accommodation, which can command higher
rents, to cater for them. Sarajevo has attracted
significant foreign investment in recent years,
being well located for businesses in both Europe
and the Middle East. An example is the 100 000
sq. m Sarajevo City Center, a substantial
recreational and business complex on which
construction began in 2009. A further increase in
rental prices is expected this year.
Increases can also be expected in Warsaw, which
has the highest rents in the region after Moscow
and St Petersburg. Poland avoided recession in
2008/9 and GDP is expected to rise by over 4%
in 2012. Another factor attracting investors is the
vastly improved transport links created to
accommodate the predicted 1.5 million fans
expected to visit Poland when it hosts the UEFA
European football championships in 2012.
Elsewhere in the region rental prices are expected
to be relatively stable in 2012. The unwillingness of
banks to finance construction projects in Slovenia
and the Czech Republic in particular may lead to a
shortage of new property coming onto the market
which may cause rents to rise, but if the economy
falters and expatriate numbers decrease then rents
will probably fall.
23
M
o
n
t
h
l
y

r
e
n
t

(
U
S
D
)
A
n
n
u
a
l

c
h
a
n
g
e

i
n

r
e
n
t
1000
0
2000
3000
4000
5000
7000
9000
6000
8000
-15%
-5%
0%
5%
10%
15%
20%
M
o
s
c
o
w
S
t

P
e
t
e
r
s
b
u
r
g
W
a
r
s
a
w
P
r
a
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u
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B
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d
a
p
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s
t
B
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c
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a
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s
t
Z
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B
r
a
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a
n
a
V
i
l
n
i
u
s
S
a
r
a
j
e
v
o
-10%
24
Moscow and, to a lesser extent, St Petersburg are
significantly more populous than other cities in the
region, so accommodation in the more central
areas that tend to be favoured by expatriates
consists almost exclusively of apartments. Families
looking for houses in Moscow should expect to live
at least 10- 20km from the city centre. In the other
cities, whilst accommodation in the very centre of
the city is always likely to be restricted to
apartments, houses, often with gardens, are
available in suitable districts much closer to the
centre, typically 2- 8km away. In Bucharest,
Bratislava and Ljubljana houses can also be found
in or very near the town centre. Families tend to
cluster in the areas around international schools,
which are often found in suburban areas. Good
public transport links are available in all locations
surveyed, which ensure much shorter commute
times than covering the same journey by car.
Rental contracts in the region are typically drawn
up for one year with the option to renew, with the
exceptions of Bratislava where lease length is more
likely to be between 18 and 21 months (although
12 month leases are becoming more common),
and Ljubljana, where leases are typically 2- 3 years
in length. It is usually easy to negotiate diplomatic
clauses into contracts but note that in Poland such
clauses only come into effect after twelve months
of tenancy. The tenant is usually required to give
three months written notice if they wish to
terminate the lease early.
A brokerage fee typically amounting to one months
rent is usually payable by the tenant, landlord or
both in addition to a deposit of one to three
months rent payable by the tenant.
With the exception of Russia, service charges are
generally not included in the rent in this region
and amount to 5- 10% of the monthly rent. There
are no housing taxes payable by the tenant except
in Ljubljana, where annual property tax usually
amounts to no more than EUR 250.
In Russia, because of the roubles history of
devaluation since the fall of the Soviet Union,
contracts are generally drawn up in US dollars.
The contract then stipulates the rouble equivalent
of the dollar-denominated rental at the exchange
rate of the day. This is meant to guarantee the
landlord a stable rental value, with payment
officially required in roubles; however, most
landlords insist on receiving payment in US dollars
regardless. Many landlords also prefer to be paid in
cash. Contracts are usually written in Russian and
English; a contract must be written in Russian in
order to be legally enforceable.
25
The majority of properties in the region are
rented furnished although large apartments and
houses will generally be unfurnished. Unfurnished
accommodation will have kitchen and bathroom
units as well as carpet or wooden flooring.
Electrical goods such as a refrigerator, washing
machine and dishwasher can sometimes be
supplied upon request but will need to be
negotiated into the lease and may be reflected
by a higher rent. It is not usually possible to rent
furniture in the region, but there are many
furniture shops available in all cities.
Furnished accommodation typically comes with
basic furniture and a full set of appliances and
electrical goods. It can cost up to 30% more to
rent furnished than unfurnished accommodation,
and landlords may request a larger deposit.
n Furnished accommodation in the
region can cost up to 30% more
than unfurnished
n Bratislava saw the biggest drop in
rents in the whole survey
n Rent increases in Sarajevo were three
times more than inflation
n Moscow tops the regions rental costs
despite huge falls in 2009
n Russian landlords prefer to be paid
in cash
26
North America
Costs and trends
The property markets in cities across North America
have all, to varying degrees, experienced increased
demand for rental properties with no corresponding
increase in supply, forcing rents upwards. Demand
has been driven by people migrating to the cities in
search of employment and a struggling sales market.
As the financial requirements to secure a mortgage
remain stringent in the wake of the sub-prime
crisis, those unable to buy properties are looking
to rent instead.
New York City is by far the most expensive city to
rent accommodation in North America, with
monthly rents more than double those of the next
most expensive city, San Francisco. There is a lack of
space to build new properties in the city, particularly
in Manhattan, ensuring that competition for
available property is fierce and prices remain high.
Midtown and Downtown areas have already seen
sharp increases in rents in early 2012 and the
market is set to remain competitive provided the
economy does not enter a second recession as
some fear; rents fell 6% in 2009 following mass
lay-offs in the financial services sector.
Workers continue to flock to second-placed San
Francisco due in part to its proximity to Silicon
Valley, an important centre for the hi-tech industry
that has weathered the economic downturn better
than most. As in New York, land is scarce in San
Francisco and properties are expensive to buy
there, forcing many people to rent and increasing
the competition for rental properties.
The smallest annual increase in rental rates in the
North American cities surveyed was seen in Los
Angeles, where new rental properties came onto
the market in 2010, easing the demand causing
the sharp increase in rents seen in previous years.
In Canada, fewer completions of property sales,
combined with steady demand, have seen rents
increase in Montreal, Vancouver and Toronto.
Vacancy rates remain low in Toronto in particular,
enabling landlords to increase their prices in the
face of increased competition for housing.
Vancouver remains the most expensive Canadian
city to rent in, although the rental market there is
stable; rent increases in the last 12 months have
been largely in line with inflation and the same is
expected in 2012.
27
M
o
n
t
h
l
y

r
e
n
t

(
U
S
D
)
A
n
n
u
a
l

c
h
a
n
g
e

i
n

r
e
n
t
1000
0
2000
3000
4000
6000
8000
5000
7000
9000
-2%
2%
4%
6%
8%
10%
12%
N
e
w

Y
o
r
k

N
Y
S
a
n

F
r
a
n
c
i
s
c
o

C
A
V
a
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v
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r
W
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t
o
n

D
C
M
i
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i

F
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B
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t
o
n

M
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A
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s

C
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D
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C
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W
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P
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T
X
M
o
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t
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D
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s

T
X
M
i
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a
p
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s

M
N
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M
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r

C
O
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h
a
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N
C
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t
a

G
A
I
n
d
i
a
n
a
p
o
l
i
s

I
N
0%
28
Many North American cities with large populations
have densely populated downtown areas, where
apartments are the only residential option, and/or
sprawling metropolitan areas extending for
thousands of square kilometres where it is easy to
find spacious, detached houses. In New York City,
for example, some expatriates may live very
centrally in expensive apartments on the Upper
East Side of Manhattan but equally they may
commute from the more reasonably priced nearby
boroughs of Queens and Brooklyn or from suburbs
further afield like Westchester County 40km away.
Commuting is facilitated by an extensive public
transport system.
In other cities like Los Angeles and Detroit,
expatriates avoid the central/downtown areas of
the city and live exclusively in suburban areas at
least 30km away. Car ownership is generally seen
as a necessity in these cities; public transport
systems are being expanded all the time but may
not necessarily serve the areas where expatriates
live. Traffic congestion can be a problem in some of
the larger cities and so commuting times should be
factored into considerations about where to live.
Basic security measures such as cameras and
intercom systems are considered adequate for most
cities in the region but many expatriates seek out
apartment buildings with a doorman in cities such
as New York and Philadelphia nonetheless.
In New York City, in particular, good quality
accommodation in prime areas can be rented out
very quickly and prospective tenants need to make
a decision soon after viewing a property to have
any chance of securing it.
The typical lease length in the US and Canada is
one year with an option to renew. In the US, letters
of employment may be requested if the lease is to
be in the expatriates name. In some cases, a credit
report will be required with a lease application.
Diplomatic clauses are difficult to negotiate into
the rental contract anywhere in the region but,
where they can be, up to three months written
notice will be required in Canada or two months
in the US. A penalty of between two and four
months rent may also be payable. In Montreal,
diplomatic clauses are unnecessary because, under
Qubec law, provided sufficient notice is given by
the tenant the lease can be terminated with a
penalty equal to one months rent (for leases
shorter than 12 months) or three months rent
(for leases of 12 months or longer).
In the USA, deposits are generally one to two
months rent. Deposits may vary depending on the
credit rating of the tenant; expatriates may be
required to pay a higher deposit than US citizens as
they are unlikely to have a credit history within the
country. Landlords may also ask for the first and last
months rent to be paid at the same time as the
deposit. In Vancouver, only half a months rent can
be taken as a security deposit, or a full months if
the tenant has pets. In Toronto, security deposits
are illegal and landlords can only collect a rent
deposit i.e. the last months rent. In Montreal, no
deposits are allowed at all, so landlords can only
collect the first months rent in advance.
29
Rental rates are usually reviewed annually in the
US, one or two months before the end of the
contract. In Toronto and Vancouver rent is
reviewed annually, with 90 days written notice.
The majority of leasing arrangements in Montreal
start and are reviewed on, or near, the first of July,
Canada Day. Every year, on this day, the whole of
Qubec experiences an upheaval as a significant
number of leaseholders move house. This unique
period is commonly known as the July Move.
Housing taxes are not usually payable by tenants
in either country and service charges are often
included in the rent. Estate agents brokerage fees
are typically paid by the landlord but where the
tenant is liable (as in New York and Boston) these
range from one months rent to 15% of the
annual rent.
Property in North America is generally rented
unfurnished. Fewer than 10% of properties in the
US are rented furnished, and these are mostly
short-term accommodation and holiday lets.
Furnished properties are easier to source in
Canada. They are usually furnished to a high
standard and therefore up to twice as expensive
as unfurnished properties. Unfurnished properties
will typically include carpets, curtains, kitchen
units and some appliances.
n The rental market is buoyant as
would-be purchasers enter the market
following the sub-prime crisis
n Diplomatic clauses in North America
are generally difficult to negotiate
n Expatriates in the US may need a
credit report to secure a lease
n Most people in Montreal move on
1 July
n Fewer than 10% of properties in the
region are rented furnished
30
Latin America
Costs and trends
Caracas is the most expensive destination in South
America for expatriates to rent accommodation and
the sixth most expensive city in the world. It was
also the location with the highest annual rental
increase in the world in 2011. Over the last five
years, rents have been rising on average 28% per
year, a trend that is set to continue; Venezuela has
experienced double-digit annual inflation rates over
the same period and the expatriate population
assigned to work in the growing petroleum industry
is entering an increasingly crowded rental market.
Construction of new properties is slow and strongly
pro-tenant rental laws mean that many landlords are
choosing to sell rather than rent out their properties.
The second highest increase in rental prices in the
region was seen in Santiago, which saw a 25.7%
increase in 2011 following a similar increase the
previous year. The earthquake in Chile in February
2010 significantly damaged housing stock
throughout the city, leading to a marked reduction
in available properties and therefore large increases
in rental prices. The market continues to be
affected by depleted stock and increased
competition for tenancies.
The Brazilian cities of Rio de Janeiro and Sao Paulo
also experienced large rental increases in 2011
(19.6% and 17.1% respectively) and are the next
most expensive cities after Caracas and Bogota.
Numbers of expatriates in Brazil are rising as the
buoyant economy continues to attract foreign
investment, and falling unemployment and
elevated wage inflation ensure there is increased
competition for high-end accommodation from
local Brazilians too. Supply is improving (many
newly constructed or regenerated high-end
properties have come onto the market in both
cities), but the awarding of both the 2016
Olympics and 2014 football World Cup to Brazil,
along with the improving economy, has generated
substantial interest in Rio in particular and
landlords are speculatively increasing rents by as
much as 20% in popular areas.
Rental markets elsewhere in the region are
relatively stable with supply and demand for
accommodation well balanced. As the Mexican
economy has strong links with the USA it was more
severely affected by the global financial crisis and
reductions in expatriate numbers than some of the
South American economies. Consequently in 2010
the Mexico City rental market was oversupplied
and a downward rental trend was observed for
many expatriate areas. The market stabilised in
2011 however.
31
M
o
n
t
h
l
y

r
e
n
t

(
U
S
D
)
A
n
n
u
a
l

c
h
a
n
g
e

i
n

r
e
n
t
1000
0
2000
3000
4000
5000
7000
8000
6000
-5%
10%
15%
20%
25%
30%
35%
C
a
r
a
c
a
s
B
o
g
o
t
a
R
i
o

d
e

J
a
n
e
i
r
o
S
a
o

P
a
u
l
o
B
u
e
n
o
s

A
i
r
e
s
S
a
n
t
i
a
g
o
M
e
x
i
c
o

C
i
t
y
L
i
m
a
Q
u
i
t
o
5%
0%
32
It is rarer for expatriates to live in the centre of
cities in Latin America than in other regions of the
world. Expatriates tend to congregate in particular
suburbs away from the centre where the air quality
may be better. Security issues also influence where
expatriates live. In sprawling Mexico City, some
expatriate enclaves are over 40km away from the
city centre, secure gated communities that serve as
individual towns in their own right with amenities
such as shopping centres, restaurants and golf
courses. In Caracas most expatriates live in the
affluent suburbs where various embassies are
located due to the heightened police presence in
these areas. Here and in Lima most expatriates live
in secure compounds or employ private security to
protect their property.
Even in cities where additional security measures
are not necessary, expatriates avoid certain
suburbs for safety reasons. In Rio de Janeiro most
expatriates live to the south of the city for that
reason. Public transport is considered unsafe or
inadequate in most cities and traffic congestion is
often a problem, so potential journey times must
also be considered when selecting where to live.
However, the coastal areas of Buenos Aires
favoured by expatriates are all served by Metro and
commuter rail lines that reduce journey times to
the city centre considerably. In this city, proximity
to certain international schools may instead dictate
where expatriates choose to live, as these tend to
be concentrated in the Palermo and Belgrano areas
to the north-west of the city, with another cluster
further north around San Isidro.
Leases in Latin America are typically a year in length
except in Argentina and Brazil where they are
usually two years or 30 months long respectively.
Diplomatic clauses can usually be negotiated into
the contract except in Ecuador and Argentina,
although in Argentina the tenant has the right by
law to rescind the contract after six months. In
most locations a deposit of one to three months
rent is standard although in Brazil a guarantor is
preferred to a deposit. Company lets are preferred
by landlords in Venezuela, Peru and Colombia.
Housing taxes are payable by tenants in Brazil and
Argentina and they vary in rate between
municipalities. Taxes are not payable by tenants in
the other cities covered here. In Bogota the lessee
is required to deduct a 3.5% withholding tax from
the rent due each month and pay it to the tax and
customs office. In Argentina stamp tax equal to
0.5% of the total lease cost is split between the
tenant and the landlord at the signing of the
contract. In Ecuador the landlord may choose to
increase the rent by 8% in order to cover the
associated tax if the expatriates company rents
the property on behalf of their assignee.
Service charges are usually payable in addition to
rent and there is a wide variation in the rate levied
depending on the type and size of property and
which services are included. Service charges are
usually in the region of 5- 15% of monthly rent, but
may be as high as 30% in Colombia if security fees
are included and the same in Brazil if the landlord
passes on the cost of housing taxes to the tenant.
33
Brokerage fees are usually charged by estate agents
and amount to between half a month to a months
rent. It varies across the region as to whether these
charges are paid by the landlord, the tenant or
split between the two.
Expatriate housing is advertised and paid for in
US dollars in a few countries in the region such as
Peru, Ecuador and Argentina. In Mexico,
accommodation is advertised in US dollars but the
rent is payable in local currency.
The majority of properties are rented unfurnished.
Furnished properties are available but suitable
properties may take some time to find and can
cost up to 35% more to rent than unfurnished
properties, the price usually being an indication
of the quality of furnishings included.
There is variation across the region as to what is
included in properties advertised as furnished and
unfurnished. Unfurnished properties will normally
have carpet or wooden flooring, light fittings and
kitchen and bathroom cabinets. Curtains may also
be available. Partly furnished accommodation will
usually include an oven, stove and appliances such
as refrigerator and may even include a bed,
wardrobe and tables and chairs. Fully furnished
accommodation will include all necessary furniture,
cutlery, crockery and sometimes linens.
n Burgeoning economies have kept
rental markets buoyant over the year
n Caracas experienced the surveys
biggest rise in rental costs during
2011 at over 30%
n Landlords in Ecuador may increase
rents by 8% to cover tax if the
company leases the accommodation
on behalf of the expatriate
n Santiagos shortage of property
following the 2010 earthquake has
inflated rental costs by more than 25%
n Service charges may be as high as an
extra 30% of rent in Colombia
34
Costs and trends
Lagos is by far the most expensive location for
rented accommodation in this region although
rental increases have been stabilising over the last
two years. The high cost here is primarily due to
the substantial demand for secure accommodation
in safe areas, which is of limited availability. 2011
did see more suitable properties enter the market,
however, relieving the pressure slightly with the
result that the increase in rental rates has been
smaller than in recent years.
Nairobi stands out as both the cheapest location
to rent accommodation in and having seen the
highest rent increase over the last year (and one of
the highest in the entire survey) at almost 30%.
Nairobi is emerging as the major hub for business
in east Africa, offering significant trading
opportunities throughout the region courtesy of
Kenyas liberal economic policies and membership
of numerous regional trading blocs such as the East
African Community. It is also well located physically
for linking the wider region with the rest of the
world through the well-developed port at Mombasa.
A large influx of foreign companies, and therefore
international assignees, throughout 2011 has
resulted in unprecedented competition for suitable
properties, and bidding wars to secure desirable
accommodation have been reported in some parts
of the city. With the trend for increasing numbers
of expatriates set to continue, further rental
increases are predicted for 2012.
In the Middle East, rental trends have been
affected by the recent social and political turmoil,
most notably in Cairo and Manama. Cairo has seen
a reduction in the number of expatriates as a direct
result of the uprising in 2011, which has forced
landlords to reduce rental rates to attract and
retain tenants. For many expatriates, the risks
associated with living in central Cairo are too high,
so there has been a growing trend of suburban
flight, where expatriates are opting to move to
high quality new-build properties in satellite cities
nearby. This is putting further downward pressure
on the rental market in Cairo.
In Manama, the exodus of expatriates following
unrest in 2011 has also helped push down rental
rates. Those who have not opted to leave entirely
have moved to areas considered safer, positioned
further away from areas which saw government
clashes with protestors. This has resulted in rental
rates dropping in previously popular compounds in
Saar and Budaiya, as expatriates with families have
moved south to Al Hamala and Al Jasra, which
retain good access to Saudi Arabia and proximity
to international schools. Landlords in previously
popular areas are being forced to reduce rent and
offer incentives such as periods of free rental to
entice tenants back to their properties.
Abu Dhabi remains the second-most expensive
location in the region, despite a reduction in rental
rates for the third year running. Many expatriates
working in Abu Dhabi opt to live in Dubai because
of the latters cheaper accommodation. Rental rates
in Abu Dhabi have been reduced to try and
counter this trend, but there remain many empty
properties and 2011 saw the construction of even
more property, particularly high-quality apartments.
The decline in rental rates had started to slow by
the end of the year, however, and projections
suggest a more stable 2012.
The cost of renting accommodation in Dubai
remains relatively high. As in Abu Dhabi, rents
have dropped significantly for the third consecutive
year, although the rate of decline has slowed.
There has been a further increase in the number
of apartments available in Dubai in the last year,
including newly constructed luxury properties,
forcing landlords to lower rents to remain
competitive. High-end villas have retained more
of their value, however, as supply is more limited,
especially in the case of larger properties.
35
M
o
n
t
h
l
y

r
e
n
t

(
U
S
D
)
A
n
n
u
a
l

c
h
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i
n

r
e
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t
1000
0
2000
3000
4000
5000
6000
-15%
0%
10%
20%
25%
30%
35%
L
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N
a
i
r
o
b
i
M
u
s
c
a
t
-10%
5%
15%
-5%
36
In Kuwait City, an oversupply of properties, coupled
with a reduced number of expatriates, left rents
down more than 15% in 2010. Since then,
however, there has been a steep increase in costs,
primarily as a result of economic recovery and
higher oil prices. Projections suggest that the
positive trend will continue, with further increases
in expatriate numbers expected and rent rises of
around 5- 6% in line with inflation predicted.
The Saudi cities of Jeddah and Riyadh do not
appear on ECAs chart of three-bedroomed
apartment costs as available apartments generally
only have one or two bedrooms and three-
bedroomed properties are normally houses, thus
making a meaningful comparison difficult. In
general, though, the relative lack of availability of
compounds preferred by expatriates has seen rents
for three-bedroomed houses increase by between
9% and 13% since the previous survey.
Apartments are available in most African and
Middle Eastern cities, although the preferred form
of accommodation for expatriates is frequently
houses or villas in affluent suburbs, often within
secure compounds featuring alarm systems,
security cameras, high walls or perimeter fences
and private security guards. The additional security
provided in these properties makes them more
expensive to rent than less secure properties, but
many tenants find this preferable to renting their
own property independently and hiring private
security themselves. Expatriates tend to cluster in
purpose-built gated communities, which may be
located up to 30km from the city centre in
sprawling cities like Johannesburg or Dubai.
Demand for secure properties is higher in many
locations following the events of the Arab Spring.
Security is not considered to be a particular issue for
expatriates in locations such as Kuwait, Istanbul and
the UAE, although properties with additional security
provision are still common in them. Expatriates in
Casablanca do not generally live in properties with
additional security. In Dakar, however, expatriates
are advised to engage the services of a reputable
security firm as most available houses are not
within secure compounds.
A car is considered a necessity in most cities in
Africa and the Middle East. With the exception of
Istanbuls Metro system, public transport is usually
either non-existent or limited to bus services which
expatriates rarely use for security and/or practical
reasons. Driving times are an important
consideration when selecting which area of a city
to live in, as poor infrastructure and traffic
congestion can lead to long commutes. It can take
an hour or more to drive to central Lagos Island
from the popular suburb of Victoria Island 3km
away, for example, due to severe traffic congestion
on the bridges that link the two.
Landlords in most African or Middle Eastern
countries tend to have a preference for company
lets. In the Middle East, leases are typically 1- 2
years in length, with the option to renew after
that. In general, 1- 3 months notice must be given
if the tenant wishes to move out. It is possible to
negotiate diplomatic clauses in most locations,
depending on the landlord, although this is
difficult in Saudi Arabia and UAE as the rent is
normally payable a year in advance.
The level of deposit required varies across the
region. In Bahrain, Qatar and Egypt a typical
amount is one months rent; in Kuwait there is often
no deposit required for unfurnished properties, but
three months rent for furnished ones; and in the
UAE, a typical figure is 5% of the annual rent for
unfurnished properties and 10% for furnished.
Deposits are not always required in Oman as rent is
usually paid a year in advance; otherwise they
typically amount to one months rent.
37
Dubais Real Estate Regulatory Authority periodically
publishes a rental index as a guide to what levels rent
should be and how much landlords are allowed to
increase rent. In 2011, no increases were allowed
unless the rent charged was more than 25% below
the guideline recommended figure. In Abu Dhabi,
rent increases are currently capped at 5% per annum.
Estate agents will normally charge a brokerage fee
to be paid by the landlord except in the UAE,
Kuwait and Egypt, where it is paid by the tenant
and amounts to between half a months to a
months rent. Brokerage fees are generally not
payable in Saudi Arabia, as negotiations are usually
conducted directly with the management of the
compound concerned. Charges for a broad range
of services including maintenance, gardening and
security are often included in the rent except in
Oman and Bahrain where they cost an additional
5% to 15% of the rent. Municipal taxes are usually
levied but apart from in Dubai and Manama these
are paid by the landlord.
In Africa, leases are typically one to two years in
length, except in Nigeria, where they are usually
two to three years (or possibly longer), and in
South Africa where houses also command longer
leases. In Ghana the rent for the entire lease period
must be paid up front. Until recently, this was also
the case in Nigeria, but a new tenancy law in 2011
means that landlords cannot demand more than a
years rent in advance. In both Ghana and Nigeria,
no deposit is required where upfront payment is
provided. Otherwise the deposit usually amounts
to between one and two months rent. Rental
payments in Kenya are made quarterly in advance.
In locations where rent is not paid in advance, it
may be possible to negotiate a break clause,
generally requiring two to three months notice.
In all the African locations covered here, with the
exception of South Africa and Kenya, tenants are
required to pay brokerage fees of either 10% of the
annual rental rate, or one months rent. Service
charges, including security fees, usually amount to
between 5% and 20% of rent, and are payable
separately. Housing taxes usually do not apply or
can be negotiated into the rent, although stamp
duty of between 1% and 2% of the annual rent is
payable by the tenant in Kenya.
Properties are generally rented unfurnished
throughout Africa and the Middle East. Where
furnished properties are available, the rent can
be between 20% and 50% higher than for
unfurnished properties, except in Qatar, where
renting a furnished home costs little extra.
Unfurnished or partly furnished properties will
usually include bathroom and kitchen units and
appliances, although in Kuwait, Qatar and Oman
they are likely to be little more than bare units.
Properties in compounds in Saudi Arabia are
usually rented fully furnished.
n Arab Spring events and exodus of
expatriates have caused rents to fall
in Cairo and Manama
n Nairobi saw steep rental increases in
the last year but remains for now the
cheapest location in the region
n Many expatriates working in Abu
Dhabi live in Dubai and commute
n In Ghana, rent for the entire period
of the lease must be paid in advance
n Company lets are preferred
throughout the region
38
Costs and trends
Rents have increased across Australia and New
Zealand in the twelve months since the last survey
for mostly the same reasons as in North America
and other parts of the world where home purchase
is common. High property prices and economic
uncertainty mean that more people are choosing
to rent than buy their homes and rents are
increasing as a result.
The largest increase has been in Brisbane, where there
has been a shortage of suitable accommodation since
the severe flooding that affected large parts of
Queensland at the end of 2010 and beginning of
2011. Rents may stabilise in the coming year as newly
constructed properties in the centre of Brisbane come
onto the market, but this may be tempered by further
demand as increasing numbers of people, including
expatriates, migrate to Queensland to work in the
expanding mining industry and base themselves in
Brisbane. The Australian government is set to
reform its visa programme in 2012, making it
easier for companies to hire the skilled migrants
they need to fill critical skill gaps.
Sydney is the most expensive city in the country in
which to purchase property and so unsurprisingly has
the lowest vacancy rates for rental properties, as home
ownership remains out of reach for many. The rate
of construction of new homes is proving inadequate
to meet the demands of an increasingly tight rental
market, and as a result Sydney has the highest rental
prices in the country. Despite new construction,
rents are predicted to rise further in 2012.
In New Zealand, the migration of large numbers
of people to Auckland in the last twelve months
has caused the average rent for a three bedroomed
apartment to increase by 6% in the same period.
Demand for rental properties has risen as many
families have relocated here from Christchurch
following the earthquake in February 2011. As in
Australia, the economic situation has also led to
more people renting than buying property,
producing upward pressure on rates.
Wellington does not appear on ECAs chart of
three-bedroomed apartment costs, as expatriates
in this city tend to live in houses rather than
apartments and therefore direct price comparison
is difficult. ECAs data on accommodation in
Wellington shows modest falls in rents for these
other types of housing across the city. Government
austerity measures have seen many former public
sector workers migrate to Auckland for
employment, contributing to the demand for
rental property there, whilst reducing demand in
Wellington. Those migrants who are homeowners
are generally renting out rather than selling their
homes due to a sluggish sales market, increasing
the number of vacant properties on the rental
market in Wellington, especially at the higher end,
with rents going down as a result.
In all the cities surveyed it is common for
expatriates to live in suburbs conveniently located
for central areas, generally within 10km of the city
centre, where there is typically a good range of
both apartments and houses available. These may
be detached properties with gardens, especially in
the smaller cities. In Perth and Wellington, in
particular, expatriates are more likely to live in
houses than in apartments.
The suburbs of Sydney are particularly extensive and
while some expatriates live in apartments in the
heart of the city, those with families often choose
to live 20km to 40km away in the Upper North
Shore or Hills District where they can rent spacious
properties with gardens and swimming pools.
All the cities surveyed are well served by a range
of public transport options, although in Canberra
this is restricted to buses, as is the case for certain
districts popular with expatriates in other cities.
Although traffic congestion is sometimes an issue
at peak times, car journeys are generally faster than
the equivalent journey by bus.
39
M
o
n
t
h
l
y

r
e
n
t

(
U
S
D
)
A
n
n
u
a
l

c
h
a
n
g
e

i
n

r
e
n
t
1000
0
2000
3000
4000
5000
6000
-2%
4%
6%
8%
10%
12%
S
y
d
n
e
y
M
e
l
b
o
u
r
n
e
P
e
r
t
h
B
r
i
s
b
a
n
e
C
a
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b
e
r
r
a
A
u
c
k
l
a
n
d
A
d
e
l
a
i
d
e
2%
0%
40
Leases in Australia and New Zealand are commonly
one year in length with an option to renew, although
both shorter and longer leases can be arranged.
Periodic leases, where the tenancy continues
indefinitely until either party gives appropriate
notice, are also possible in New Zealand. There is
a preference for company lets in both countries.
Diplomatic clauses are widely accepted in
Australia but are only usually applicable after the
first twelve months of the lease. In New Zealand
diplomatic clauses can be negotiated but are not
widely used as they are not legally recognised
under the 1986 Residential Tenancies Act and are
therefore not enforceable.
In both countries, tenancy deposits are known as
bonds and are held with government bodies until
the end of the tenancy. The maximum bond varies
by state in Australia but it is generally no more than
four weeks rent. A holding deposit may also be
paid to the landlord to secure the property. Bonds
in New Zealand may not exceed four weeks rent.
Rent is usually quoted as a weekly figure but is paid
monthly or fortnightly. There are no housing taxes
payable by tenants in either country. Service
charges are generally covered by the rent but may
be required as separate payment for some
apartments in New Zealand, in which case they
typically amount to around 5% of monthly rent.
Brokerage fees are paid by the landlord in Australia
but are paid by the tenant in New Zealand, subject
to a maximum of one weeks rent plus 12.5% GST.
In both countries properties are usually rented
unfurnished. Unfurnished properties will generally
include flooring, light fittings and essential kitchen
equipment, such as an oven. Rents for furnished
properties are about 10% higher than for
unfurnished properties in New Zealand and
between 20% and 40% higher in Australia.
n Rents in the region are being buoyed
by lack of movement in the sales
markets
n Expatriates in Perth and Wellington
are more likely to rent houses than
apartments
n Sydney rents are set to continue to rise
n Damage to property from floods in
Brisbane caused the biggest increases
in the region
41
42
Comparison of worldwide
utilities costs
Utilities are an additional cost to consider when
arranging accommodation for assignees because,
with the exceptions of Bahrain and Kuwait, they
are generally not covered by the rent in any of the
countries surveyed. It is common practice for
companies to cover the cost of assignees bills for
heating, lighting and water either in full or in part;
on average fewer than a third of assignees are
required to bear these costs in full themselves.
As shown by the graphs, there are large variations
in utilities prices globally, making a significant
contribution to the overall cost of an assignment in
countries at the upper end of the scale. Total bills
in the most expensive location, Chile, are more
than twelve times those in the cheapest location,
Kazakhstan. Energy bills make the largest
contribution to the overall utilities cost in all
countries, so it is no surprise that eight of the top ten
most expensive countries for heating and lighting
(overleaf) are also present in the overall top ten.
Annual utilities costs for a typical expatriate residence top ten
A
n
n
u
a
l

c
o
s
t

(
U
S
D
)
1000
0
2000
3000
5000
4000
6000
7000
8000
9000
C
h
i
l
e
D
e
n
m
a
r
k
P
h
i
l
i
p
p
i
n
e
s
J
a
p
a
n
G
h
a
n
a
S
i
n
g
a
p
o
r
e
G
r
e
e
c
e
S
p
a
i
n
B
r
a
z
i
l
P
o
r
t
u
g
a
l
Water Heat & Lighting
43
The utilities costs on these graphs are average annual values for a typical expatriate residence, compiled from assignee
responses to ECAs September 2011 cost of living survey. The figures are therefore a reflection of both consumption
and underlying unit costs.
Heat and lighting costs refer to the combined cost of electricity, gas, heating oil or other fuels supplied to the
property and as such cover the use of appliances and air conditioning where appropriate.
Water costs are the charges for the supply of water to the property and do not include the costs of bottled water.
Annual utilities costs for a typical expatriate residence bottom ten
A
n
n
u
a
l

c
o
s
t

(
U
S
D
)
500
0
1000
1500
2500
2000
3000
S
a
u
d
i

A
r
a
b
i
a
N
e
w

Z
e
a
l
a
n
d
*
P
o
l
a
n
d
E
c
u
a
d
o
r
V
e
n
e
z
u
e
l
a
E
g
y
p
t
F
i
n
l
a
n
d
*
A
r
g
e
n
t
i
n
a
R
u
s
s
i
a
*
K
a
z
a
k
h
s
t
a
n
Water Heat & Lighting * Water costs included in rent
Water bills have greater significance in the Gulf
States and many South American countries,
constituting up to a third of total utilities costs in
some places. Brazil, for example, is placed 9th in
our overall ranking but would only be 28th out of
64 countries if looking at energy bills in isolation.
Interestingly, there does not seem to be any
correlation between amount of utilities costs and
company policy regarding their reimbursement.
Assignees working in Western Europe, Australia,
North America or major Asian hubs such as Hong
Kong are half as likely to receive this benefit as
their counterparts in the Middle East or Africa,
despite there being an even distribution of
countries from all regions throughout the ranking.
It could be that rather than being designed
around actual cost levels, utility reimbursement
policies are being used as a means of creating
more generous remuneration packages as a
motivator to accept postings to locations
perceived as being more challenging.
44
Heat and lighting
At the top end of the scale we see mainly countries
with deregulated energy markets where the costs of
raw materials and energy production are passed on
to the consumer. Chile tops the table for the second
year running, due to a dependency on hydroelectric
power coming under strain from extensive drought,
coupled with increasing demand as the Chilean
economy grows. With few fossil fuel reserves of its
own, Chile is increasingly reliant on expensive
imports of oil and natural gas to fill the shortfall.
Unsurprisingly, the electricity supply in Chile can be
erratic and prone to seasonal shortages and
occasional power cuts, which is also the case for
other countries in the top ten like Ghana and the
Philippines. In these two countries, scheduled cuts
and brownouts are a fact of life, so when sourcing
accommodation it is advisable to secure properties
with back-up generators.
In addition to raw material and production costs,
taxation can make a significant contribution to
energy bills in some countries. Over half of the cost
of electricity bills in second-placed Denmark consists
of VAT and energy taxes, a deliberate policy to
Annual heat and lighting costs for a typical expatriate residence top ten
Annual costs (USD)
1000 2000 3000 4000 5000 6000 0 8000
Chile
Denmark
Philippines
Ghana
Japan
Singapore
Greece
Spain
Pakistan
Vietnam
7000
encourage consumers to reduce energy consumption
in order to meet EU environmental targets. At the
other end of the scale, very different government
policies result in some of the lowest utility bills in
the world. Coal and gas-rich Kazakhstan heavily
regulates the prices its residents pay for gas and
electricity and in Russia there is a huge discrepancy
between the export price for natural gas and the
price paid by domestic consumers. In fact, the
majority of countries in the graph of cheapest
utilities are major producers of fossil fuels that
subsidise residential energy bills to varying extents.
In Argentina, residential tariffs were frozen nearly
ten years ago to shield citizens from the rampant
inflation sparked by massive devaluation of the peso
in 2002. The Argentine government, like many
elsewhere, is seeking to curb public spending and
has announced its intention to reduce utility
subsidies, in the first instance targeting businesses
and domestic residents of some affluent
neighbourhoods in Buenos Aires. As these are the
neighbourhoods where expatriates are likely to
live, we can expect to see their energy bills
increase significantly in 2012. With oil prices near
their 2008 peak, more and more governments with
deficits to reduce are seeking to remove subsidies,
45
Annual water costs for a typical expatriate residence top ten
Annual costs (USD)
200 400 600 800 1000 1400 0 2000
Brazil
Colombia
United Arab
Emirates
Peru
Oman
Denmark
Chile
Qatar
Germany
Japan
1800 1200 1600
but given the political sensitivity of this issue (the
removal of petrol subsidies in Nigeria in early 2012
sparked a nationwide strike), most parts of the
world are likely to see a gradual reduction of
subsidies over the next few years rather than
immediate abolition.
Water
In some countries it is common for water charges
to be included in the rent, as is the case for
Switzerland, Austria, New Zealand, Finland and
Russia. In the Irish Republic, local authorities are
precluded by law from charging for domestic
water use.
If water costs are viewed in isolation, a number of
countries with comparatively cheaper energy costs
now appear in the top ten, notably the Gulf States
of UAE, Oman and Qatar. Despite a fundamental
scarcity of water in the region, consumption of
this precious resource is extremely high in these
countries, encouraged by historically generous
government subsidies. Water is largely sourced
through the energy intensive (and therefore costly)
process of desalination, fuelled by oil which could
otherwise be sold at a profit on the international
market. In recent years the governments of these
states have therefore begun to reduce subsidies,
charging for water use on a sliding scale as
consumption increases. Charges generally only
apply to the (substantial) expatriate populations of
these states; local nationals still receive their water
free. Assignees in Qatar advise that expatriates
keep a record of their water and electricity meter
readings, as bills are sometimes estimated.
A number of South American countries also appear
in the top ten, ironic for a continent renowned for
high rainfall but reflecting the prevalence of
charging by increasing block tariffs to address
social concerns over the price of water. Most of
Brazil, for example, applies a low tariff for a certain
amount, with charges rising with consumption, as
it is assumed that wealthier people use more water
because they can afford to do so. It is unsurprising,
then, that expatriates report high water bills, as
they are likely to earn more than the average
citizen, consuming more water and paying for it
at a higher rate.
ECA Global Perspectives
ECA Global Perspectives provide overviews of
trends evident in key findings of ECAs main surveys
and research. This report on Accommodation is the
second in the series, the first being Tax & Social
Security. Global Perspectives can be downloaded
free from ECAs website in the Resources >White
papers section. Further reports on subjects
including cost of living, salary comparisons and
quality of living will follow.
Accommodation services
ECAs accommodation reports are comprehensive
guides to the availability, costs and conditions
involved with renting expatriate accommodation,
and are available for over 120 cities around the world.
With details about the areas and types of
accommodation favoured by expatriates, the reports
contain comprehensive rental price data, country-
specific policy benchmarking and other information
to help with choice and budgeting of housing.
Incorporating easy-to-use look-up tables with
detailed background information, a typical
report covers:
Rental trends
City rental costs
District guides
Utilities, taxes and service charges
Housing policy
Schools, sports and social clubs and other
useful contacts
Subscribers to ECAs services can also view the
reports in MyECA to access interactive city maps
highlighting popular expatriate districts,
international schools and sports clubs.
Accessing data and information
ECAs Accommodation reports can be accessed
online through a subscription to ECA data or
on an ad-hoc basis at the online shop at
www.eca-international.com. Purchasers can
download sample documents and calculations
prior to completing any transaction.
Additionally, ECA provides a consultancy service
through which we can give full support and
advice to multinational clients, including design
of housing policy.
About ECA International
(www.eca-international.com)
ECA is the worlds leader in the development and
provision of solutions for the management and
assignment of employees around the world. Our
highly skilled teams help to ensure that businesses
international assignments operate efficiently and
cost-effectively.
Delivering data, expertise, systems and support in
formats which suit its clients, ECAs offer includes a
complete out-source package of calculations,
advice and services for companies with little
international assignment management experience
or resource; subscriptions to comprehensive online
information and software systems for companies
with larger requirements; and custom policy and
system development projects for companies who
manage thousands of international assignees
around the world.
About this report
47
Other data and services available from ECA
Registered users of ECAs website can access a
number of reports and services online.
Calculations and reports available to
buy online
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Country Profiles Gross-to-Net
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Take part in selected ECA surveys and get the
results free. See Surveys in the MyECA section of
www.eca-international.com.
Further services available from ECA
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solutions designed to your particular needs,
including:
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For more information, please see
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