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London rental market yet to feel full effect of Covid-19

  • Rental prices in London’s prime locations set to fall, as remote working reduced property demand according to latest rental accommodation report
  • Glasgow’s rent increased a staggering £73 per month, as young professionals flock to the city
  • HS2 boosts corporate confidence in Birmingham, leading to rental price increases
  • Istanbul dropped 60 places in ECA International’s global cost ranking, experiencing a 30% decrease in rental prices
  • Taiwan’s successful handling of Covid-19 boosts expat confidence, triggering a rise in rental prices of £340 in Taipei

The global pandemic is yet to influence rental prices for expats living in London, according to global mobility expert ECA International, as economies adjust to the impact of Covid-19.  

While London maintains its position as the most expensive location in Europe to rent for the fifth year in a row, and fourth in the world, the landscape is set to change as cities navigate their way through the latter stages of the global pandemic. Though London’s expat renters experienced a rise of £56 per month, it’s considerably less than the rental increase in 2020 (£121 per month).

The average cost of a three-bedroom, mid-range home in a prime London location for expatriates is now £5,364 per month (USD 6,933), according to ECA’s latest Accommodation Ranking report.

“As expected, the Covid-19 pandemic is set to influence rental prices in London, but the full extent of this is still yet to be seen. Future falls in rents are expected in prime central districts, and it’s likely some level of remote working will remain across many industries post-pandemic. A central location is therefore likely to move down the list of priorities for many expat renters, with larger properties and outdoor space becoming more attractive,” said Alec Smith, Accommodation Services Manager at ECA International.

Manchester, the UK’s second most expensive city, has seen a monthly rental increase of £39. Meanwhile Birmingham, which is a staggering 184% cheaper per month than London, has seen rent go up by £54 per month, more than double the increase the city experienced in 2020 (£25). 

The average cost of a three-bedroom central home in Manchester, ranked 28th in Europe, is £1,913 (USD 2,472) and in Birmingham, ranked 31st, £1,885 (USD 2,436). 

Smith said: “The construction of HS2 is still increasing corporate confidence in Birmingham, and therefore demand for accommodation is driving up rental prices, despite ongoing delays. We’re seeing more business growth in large UK cities outside of London, with organisations choosing to open or relocate operations in the UK, particularly in Manchester.”

Glasgow, an attractive offering to young professionals drives up rental costs

Though the second cheapest city for expats to rent in the UK, Glasgow, ranked 68th in Europe, has seen the highest rental increase in the UK of £73 per month, while Aberdeen, ranked 69th in Europe has increased by a moderate £20 per month. 

Smith said: “Glasgow is increasingly becoming an attractive option for young professionals; with properties being built in prime locations targeted at this demographic, which is driving up the rental market price, reflected in our latest findings. Rent is likely to continue to rise, as Glasgow City Council commits to increase the core city centre population by 40,000 by 2035.”

“Though Aberdeen’s slowing oil and gas industry saw the Scottish city drop last year to its lowest ranking since 2012, we’ve since seen a slight upturn, as the market dropped to such a degree that it has since rebounded. Furthermore, recent legislation, which strengthens tenants’ rights, has increased confidence in the market.” Smith concluded. 

Edinburgh, the UK’s fourth most expensive city, sees a slowing in rental increase by just £29 per month, compared to the £106 per month increase experienced in 2020. Edinburgh dropped one place in the European ranking, now 44th. 

The average cost of a three-bedroom home in Edinburgh is £1,664 (USD 2,150), in Glasgow is £1,187 (1,534), and in Aberdeen is £1,180 (USD 1,525).   

Effects of Covid yet to impact Europe’s steady rental market

Dublin remains the fifth most expensive city to rent in Europe, having experienced an increase of €119 per month, a 2.2% rise in 2020, though a slower rate of increase than experienced between 2019 and 2020, which was a staggering 6%.

The average rental cost of a three-bedroom central home in Dublin now €3,713, per month (USD 4,116), making it far costlier than other European capital cities such as Rome at €2,729 (USD 3,011), Berlin at €2,475 (USD 2,730) and Valencia at €1,600 (USD 1,765). 

Smith noted: “Dublin remains a popular location for businesses to send staff on assignment, so demand continues to impact accommodation costs. In addition, ongoing building regulations which remain tight in Dublin makes supply slim in popular areas of the city.”

A non-mover, Paris ranks sixth most expensive in Europe with a rental increase of €76 per month, now costing €3,537 (USD 3,902). Hamburg, ranking 20th in Europe, also saw a steady rise in rental prices of €46 per month, now costing €2,470 (USD 2,725). 

Smith added: “Though rental prices remained largely stable in Europe, the true impact of the Covid-19 pandemic on rent levels has not yet been seen. While many residents left cities to move further out or back home, the pandemic effectively froze many property markets instead of causing immediate downward pressure on rents.”

“The success of countries’ routes out of lockdown and back to some sort of normality will change how property markets react. Faster recoveries are likely to act as a brake on falling rents, but the economic damage of the last year is likely to lead to reductions in most major cities as incomes become squeezed and remote working persists. We anticipate city centres being most impacted by falling rents, with outer lying areas becoming more popular,” concluded Smith. 

Turkey’s impending financial crisis causes largest global rental decrease 

Istanbul dropped 60 places in the global ranking, now the 116th most expensive city in the world to rent in. Costing USD 2,441 per month, it has seen a 30% decrease on the previous year (USD 3,520).

Smith said: “Turkey continues to battle economic instability, as it faces an impending financial crisis. There remains a lot of uncertainty in the market, highlighted in recent global headlines as the central bank governor was removed last month by President Recep Tayyip Erdogan. Economic policies being tried by the government have resulted in the local currency dropping against the dollar.”

Successful handling of mitigating Covid-19 results in expat confidence to Taiwan

All locations in Taiwan rose in the global rankings as the country's success in mitigating Covid-19 transmissions led to far fewer expatriates leaving Taipei in comparison to other major cities in the region.

Now ranking 29th most expensive city in the world to rent, the average rental cost in Taipei is USD 4,101, having experienced a £340 (USD 445) increase per month. 

Hong Kong retains top spot despite rents falling

Hong Kong has been named the most expensive location in the world for expat accommodation for a fourth year in a row, but still saw rental costs drop considerably due to the effects of Covid-19. The average monthly rental price for an unfurnished, mid-market, three-bedroom apartment in Hong Kong was USD 10 769, a drop of 5.95% compared to 2020.

Smith explained “Hong Kong has seen a rare decrease in rental costs this year, as Covid-19 has lessened the demand for accommodation in the top-tier areas where expatriates would normally reside. The pandemic has had a serious effect on international business in general, but more specifically has severely limited the number of overseas workers moving to Hong Kong. This has resulted in a lower demand for high-end accommodation and therefore a drop in the average expatriate rent. However, Hong Kong is still by far the most expensive location in Asia for rental costs and still more expensive than New York, despite the gap closing slightly this year.”

Top 10 most expensive cities to rent in the world
Location
2021 Ranking
2020 Ranking
2019 Ranking
Hong Kong
1
1
1
New York NY
2
2
2
Tokyo
3
3
3
London
4
4
4
San Francisco CA
5
5
6
Port Moresby
6
6
5
Miami FL
7
8
11
Tel Aviv
8
11
21
Shanghai
9
7
8
Buenos Aires
10
9
10
Top 10 most expensive cities to rent in Europe
Location
2021 Ranking
2020 Ranking
2019 Ranking
London
1
1
1
Zurich
2
2
3
Geneva
3
4
4
Moscow
4
3
3
Dublin
5
5
5
Paris
6
6
6
Kiev
7
7
11
Copenhagen
8
8
9
Luxembourg City
9
9
7
Amsterdam
10
10
8

ECA’s annual rental accommodation report analyses the rental prices for a mid-market, three-bedroom home in areas commonly inhabited by expatriates.

-ENDS-

Notes to Editors

  • Figures used in this release were taken from ECA's  2020 Accommodation Survey.
  • The survey was based on the average rental prices for a three-bedroom home in the mid-range of the expatriate market.The rental prices were collected in 2020 and have been converted into US dollars for ease of comparison using 2020 exchange rates.

About ECA International 

ECA International is the market-leading provider of knowledge, information and technology that enables businesses to manage their international reward programmes.

Partnering with thousands of clients on every continent, we provide a fully-integrated suite of quality data, specialist software, consultancy and training. Our unparalleled insights guide clients as they mobilise their most valuable resource: people.

We make the complex world of international mobility simple, providing clients with the expertise and support they need to make the right decisions - every time.

ECA International: Mobility solutions for a world that’s constantly moving.

ECA International's housing data

This ranking is based on data from ECA's accommodation reports, which we began publishing annually in 1996. The reports provide comprehensive and reliable information for locations worldwide on the rental trends, types of accommodation and districts commonly sought by expatriates. To ensure impartiality and to maintain the accuracy of information, data from a number of sources is used to compile each accommodation report. ECA uses a global network of estate agents, relocation agents and extensive in-house research into worldwide property markets to establish and verify the housing data in the reports. Rental prices are collected annually. This housing data is also fed into ECA's Accommodation Tool which can be used to set, manage and review the right accommodation allowances for international assignees.

For further information, please contact:

Jack Firth
+44 (0)20 7351 5000
jack.firth@eca-international.com

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