Global housing hotspots — the fall and rise of rental rates for international workers

Staff are relocating to countries in different stages of readiness and recovery. From Australia to the UAE, some property prices are back to normal, many are adjusting to a new normal, and a lot are anything but normal.

In this edition of Reloverse, HR and Global Mobility experts can learn what’s happening in short and long-term rental rates, plus tips to help them secure somewhere staff can live, work and thrive.

Destinations in demand

Geopolitical events are affecting property prices across Europe — restricting supply, driving-up demand, and increasing costs. It’s putting pressure on GM experts to compromise their search for the perfect place their staff can call home. Prices in destinations such as Bucharest have risen by 15-20% as an influx of Ukrainian and Russian citizens with spending power has piled pressure on property prices. And that demand is rippling across continental Europe. In Vienna we’re seeing the best apartments being leased within 48 hours of coming to market: even temporary housing now needs to be secured two months or more before an assignee’s arrival. This displacement of demand is flowing further west, affecting availability from Munich to Stuttgart, and Basel to Geneva. The cost of utilities and construction materials have also risen, and government taxes on rental income have emerged, meaning most assignees now need higher housing allowances to compete.

Rents and relationships

As well as prices, processes have also dramatically changed, and overbidding the asking price of leases is now commonplace across Benelux and the Netherlands. Securing the right property is also becoming a more personal one for landlords and agents. Virtual visits are less popular, with property owners, in particular, preferring to meet potential tenants face to face. Assignees can boost their prospects during the search and shortlist phase by including photos plus personal and professional statements. As well as rents, it’s now about relationships.

Similarly, in Spain and Italy, where condominium charges have jumped, preparing a detailed candidate dossier is a positive way to influence and meet landlords’ demands — who are also increasingly seeking rent default insurance as the norm. From Barcelona to Madrid, the availability of property in the long-term rental market continues to fall, but more opportunities for short-term rentals are appearing every week. In France, where many cities are subject to effective shielding from unjustified rent increases, the government has cushioned the effects seen across much of the rest of Europe through Zones Tendues (tense zones). These limit what landlords can do in terms of rates and reviews — and are worth researching.

Post-pandemic predictions

Rents and the cost of living have also risen sharply across the UK, resulting in tenants staying put, reducing turnover and housing supply. Predictions mid-pandemic that inner city apartments with no outside space would suffer a complete collapse in demand proved false, with landlords now charging record rents and dictating terms, including longer leases. This particularly affects lower-budget assignees’ ability to find quality, affordable accommodation, especially in London.

Middle Eastern hotspots

Overall, it’s tough to find high-quality, low-cost accommodation opportunities in continental Europe or the UK. And the situation is similar in the Middle East. The United Arab Emirates is a microcosm of a wider clamour for executive living across the region. Executives exiting Russia and demand from Asian countries still under Covid-19 restrictions are fuelling rent rises in Abu Dhabi and Dubai, causing the cost of furnished homes to skyrocket by 27% since this time last year. Many leases now stipulate the first year’s rent is paid in advance. Over the border in Saudi Arabia, while the world’s attention is on the astonishing development of NEOM, the average cost of a three-bedroom compound villa in Riyadh remains around EUR€35,000 pa — 50% lower than its equivalent in Dubai — but still up by 6% on 2021.

Reversal of fortunes

Asia is also under its own unique set of pressures, and the causes and effects vary by country. Singapore has seen increased demand for larger properties as more people work from home. This has driven-up rental rates by 10% in an already costly place to live. Singapore ranks as the seventh most expensive place to live in the world, with the average city centre studio apartment now costing EUR€2,100 per month. Meanwhile, in a reversal of fortunes, the effect of continuing Covid-19 restrictions in Hong Kong has meant a net outflow of people from the Special Administrative Region, causing prime rents to slip. High-end homes have fallen by almost 7% in just two years.

Secondary markets including Vietnam have become inconsistent places to search for a home. Landlords often decide arbitrarily on rental charges — so prices may vary even in the same building or compound. It’s hard for GM professionals to bid in a system that doesn’t rely on the usual metrics or comparisons. Ho Chi Minh City property owners are impatient and money talks more than ever.

American attitudes

There’s better news coming out of the United States, where rents are declining from the historical highs of a year ago. Demand and generous government support have enabled lots of new development — but apartments in major cities such as New York and San Francisco command higher than ever rents as corporate America pushes hard to bring workers back from remote to office working.

South America, meanwhile, remains fragmented, with hotspots in the usual pinch points, particularly at high season in places like Rio de Janeiro. In Brazil, there’s no Multiple Listings Service, which means several agents can simultaneously market the same property at different rental rates. But most leases still contain a Diplomatic Clause which allows tenants to break their contract after 12 months if they’re transferred, which can be attractive in uncertain times.

Larger lettings and Zoom rooms

Australia has seen similar increases to most developed markets, in particular, the premium on space and place as working from home during the pandemic has made a Zoom room prerequisite. Short-term rentals have also been pushed up and out of certain suburbs through tourism rental platforms. If staff have thoughts of relocating to bohemian Byron Bay, almost a third of all property can be found on AirBnB at any one time, commanding greater annualized rent than a single letting could hope to.

Open to new places and spaces

Crossing continents while housing costs are in such a state of flux demands speed and flexibility. The task of finding the right place for people can be lengthy and frustrating. So a calm approach, agility and open-mindedness are key. This needn’t mean compromise in the quality of accommodation, simply being less rigid on precise locations or even property formats. Being flexible on apartment shapes and sizes and open to new districts and neighbourhoods means high-standard accommodation can be found if you know where to look. It’s also good to keep your consideration list of homes shorter and be prepared to take decisions faster than you might like or be used to. A well-designed discovery trip for assignees is also a great investment. It will help set expectations and avoid disappointment for those lured by picture postcard preconceptions of their likely new home.

Live, work and thrive

Securing somewhere great at a competitive rate can be tough, but with the right plan, tools and attitude, there are some wonderful places to live and work. If you’re looking for an expert partner — our home-finding programme helps assignees select and secure their perfect property. It’s an end-to-end service, from market screening and property viewings, to lease assistance and check-in. To see how we make it easy, simply drop an email to reloverse@santaferelo.com and we’ll get back to you.