Expat rental rates to keep on rising in Shanghai
Rental rates for expatriate housing in Shanghai are expected to increase by as much as 8 per cent this year due to a strong inflow of foreigners and tightened credit and home buying restrictions imposed by the central government, according to property consultancy Knight Frank.
The number of foreign workers deployed to Shanghai is expected to remain strong this year, raising demand for expatriate housing, especially in the Pudong area, Knight Frank noted in its "Shanghai Expatriate Housing Market Insights 2013" report.
"The city's economic growth and its status as China's financial capital continued to attract foreign workers," said Regina Yang, head of research and consultancy at Knight Frank in Shanghai. Among the key locations chosen by expatriate communities, downtown Puxi and the Pudong have the highest rents, reaching 189 yuan (HK$234) per square metre.
In the luxury apartment segment, the Lujiazui in Pudong and Xintiandi areas in downtown Puxi recorded the highest rents in 2012, according to Knight Frank.
In Lujiazui, the cluster of luxury serviced apartments, such as IFC Residence, Fraser Suites and Marriott Executive Apartments, pushed up the average rental to between 30,000 yuan and 50,000 yuan per month. In Xintiandi, four bedroom apartment units gained popularity and achieved the highest rental rate in Shanghai, ranging from 55,000 yuan to 65,000 yuan per month.
The inflow of foreigners to Shanghai has bolstered the expatriate housing market, which pushed up both rents and occupancy rates in 2011 and 2012, said Knight Frank. Demand remains strong this year, with vacancy rates expected to reach a low of 4 per cent, even though corporate housing budgets have tightened.
Rents are expected to increase further in the coming two years due to property cooling measures.
The government policies have also led to an increasing number of local Chinese demanding high-end rental properties in the rental range of 10,000 to 25,000 yuan per month, further stimulating demand in the prime areas of Shanghai.
While the demand and rents for expatriate housing are expected to rise, a greater proportion of companies are offering localised packages to allow greater flexibility and choice, said Yang.