PETALING JAYA (Jan 16): Kuala Lumpur dropped out of Asia’s top 40 most expensive cities to rent homes amid a property glut, according to the latest Accomodation Survey by consultancy ECA International.

It now ranks behind other cities such as Colombo in Sri Lanka and Kathmandu in Nepal.

“The property market in Kuala Lumpur has suffered from high levels of speculation over the past couple of years and high levels of new construction. The market is oversupplied, and landlords are having to compete significantly on price to secure tenants,” said ECA International regional director Lee Quane.

“The domestic economy has not been strong enough to bolster demand for the excess of higher-end properties on the market. However, a slowdown in property construction and cooling measures from the Malaysian central bank should see the market stabilise in future years,” he added.

Kuala Lumpur joins Singapore, Ho Chi Minh City in Vietnam, Yangon in Myanmar, and Jakarta in Indonesia in falling down the ranks of most expensive Asian cities to rent accomodation.

“Singapore is now the eighth most expensive location in Asia for rental accommodation, down one place from last year, and down from fourth in 2016,” said Quane.

For instance, an unfurnished mid-market 3-bedroom apartment in areas popular among international executives in Singapore average US$4,337 (RM17,187) per month, which is over US$175 less than a year ago.

“This is due to a slowing of economic growth and a net reduction in inbound assignments, exacerbating the surplus of higher-end properties on the market that would normally attract expatriates. This oversupply has reduced average rent levels in Singapore for the past three years,” he said.

On the flipside, Hong Kong, Shanghai in China and Mumbai in India, continued dominating the top 40 list, occupying the first, third and fifth places respectively.

Hong Kong’s homes continue to command a premium owing to its high population density and scarcity of supply, with an unfurnished mid-market 3-bedroom apartment in expat-friendly areas averaging US$10,461 per month.

“Rents have risen slightly in the past 12 months. However, despite the high rental costs in Hong Kong, rent for the type of accommodation featured in our research remains lower than it was in 2012.”

Meanwhile, Shanghai’s rising accommodation costs are driven by more inbound relocations to the city.

“Rents in China have risen owing to an increase in the number of inbound relocations to the city. This elevated demand in an already tight market has caused the rent rises we have seen in 2018,” he said.

In Mumbai, higher rents are concentrated in selected districts preferred by expatriates.

“Expatriates living in Mumbai are typically competing for properties in a relatively small number of districts relative to the size of the city as a whole. This high level of demand forces rents upwards, while developers are continuing to lift property standards in Mumbai which also raises the average rent level,” he added.

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