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How have rental costs been impacted by the global events of 2017?

Average rents around the world have, for the most part, remained stable this last year. However, there have been some notable changes. By analysing ECA’s latest accommodation survey we look at why rents in China and India have increased, the impact that political and economic crises can have on rent and whether rents in oil-rich nations have finally begun to stabilise with the increase in oil prices.

Rents in China and India are on the up

ECA’s latest survey shows that average rents in China and India have significantly increased since last year. In fact, out of the ten largest rent increases that we saw in our survey, cities in China and India make up seven of them. As a result, Shanghai has crept up to eighth place in our ranking of the most expensive cities in the world for high-end rental accommodation, and Mumbai isn’t far behind in 14th place. 


In China, healthy economic growth has led to increased expatriate relocation throughout the country. The government has also introduced a number of new property-cooling measures to try and quell speculative property buying - the chief source of soaring property prices in recent years. In Guangzhou tenants are now allowed to send their children to nearby schools, increasing the appeal of rented accommodation. Previously only offspring of homeowners could enrol. In eight other cities the government has placed restrictions on property investment. In Chongqing this has involved banning the reselling of homes within two years of purchase. The combined effect of this increased demand plus an undersupply of properties has led to some significant increases in rental prices. This can best be seen in Chongqing, Guangzhou and Shenzhen, in all three of which average rents have risen by more than 11% in the space of a year.

In India the most notable rent increases have been seen in Pune, Chennai, Mumbai and Hyderabad. These have mainly been a result of increased demand from expatriates and locals for high-end rental accommodation. Over the last year or so the government has introduced a number of new measures to try and make India more business-friendly, including tax reforms and increased maternity leave. Subsequently, India moved 30 places up the World Bank’s Ease of Doing Business rankings to 100th place in October. Businesses have begun to recognise the huge potential that this country has to offer and, as a result, foreign investment has increased, leading to an increase in rental prices. 

Political and economic crises take their toll on rents 

While rents in the majority of our surveyed locations remained stable, there have been some notable decreases caused by political and economic crises.


In Caracas, civil unrest triggered by the crippling economic crisis has caused rents to continue to plummet. Companies spooked by the frequent kidnappings, shootings and barricading of roads have pulled more expatriates from the country, which has led to a fall in demand for rental accommodation. As a result, for the third survey in a row, Caracas has had the largest decrease in rents, causing it to fall out of our top ten most expensive cities in the world for high-end rental accommodation. Due to this volatility, we have been monitoring the situation closely every six months since September 2016 and will continue to do so in our March survey this year.

In June, an air, sea and land blockade was placed on Qatar by Saudi Arabia, Bahrain, Egypt and the UAE due to Qatar’s alleged support for various terrorist organisations and longstanding political disputes. The long-term consequences of this diplomatic crisis have yet to fully impact the rental market but uncertainty over the situation, combined with an increased supply of rental properties on the market, has resulted in a fall in average rents in Doha. Other Gulf nations have not seen a major impact on their rents, though there has been a general downward trend, mainly attributed to the slump in oil prices. 

The ongoing economic crisis in Zimbabwe has led to a fall in demand from expatriates, which has resulted in Harare having the second highest rent decrease in our survey. This is partly due to the lack of hard currency in the country. Throughout the year withdrawal limits of as little as 20 dollars a day have been put in place by banks. Unsurprisingly, this has not made it a very appealing location for businesses. However, Mugabe’s resignation in November has brought newfound hope to the country and there is optimism that this could lead to a new era of re-engagement with the international community and increased foreign investment.

Finally, one of the largest corruption scandals in modern history has swept through Latin America this last year, negatively impacting economic growth throughout the region. In 2015 it emerged that the Brazilian construction company Odebrecht had been bribing politicians in return for building contracts in a dozen or more countries throughout Latin America and Africa. Peru has been particularly badly impacted by this scandal. The “Odebrecht effect” has been blamed for shaving a whole point off the country’s economic growth for 2017 and in December the Peruvian president only narrowly avoided impeachment over allegations that he had accepted bribes from the company. This has resulted in a fall in foreign investment into the country and, coupled with an oversupply of properties, has led to a decrease in rents in Lima.  

The impact of the oil slump continues . . .

Rents in oil-dependent cities such as Jakarta, Muscat, Quito and Manama have continued to fall as a side-effect of the oil price shock of 2014. Oil and gas companies have closed or scaled back their operations, resulting in an exodus of expatriates and an oversupply of properties. The fall in oil prices has also had a knock-on effect on their economies. Last year economic growth in Oman fell to 0% and Ecuador now faces significant debt since relying on oil prices to support generous public spending. In 2016 it recorded a government debt equivalent to 40% of the country’s GDP, which has led rating agencies to warn about the risks of investment in the country. These factors have resulted in a fall in demand for high-end rental accommodation from both expatriates and the local population. 

. . . though perhaps not for long 

In November 2016 OPEC and Russia agreed to cut oil production for the first time in eight years. Since then oil prices have steadily begun to rise, so much so that in mid-January Brent crude hit 69 dollars a barrel, its highest since 2014 and up 30% from a year ago. Though many oil rich countries are yet to see the effects of this on their rental prices, signs of recovery have begun to show. Malaysia’s economy grew by 5.8% last year, its highest annual growth rate since 2014. As a result, rents have finally begun to stabilise, as confidence in the economy has grown.  

Further agreements made by OPEC and Russia in November, to keep curbing their oil production throughout 2018, have raised hopes that this increase in prices may continue. Though it is still early days, this leads us to cautiously predict more stability in the rental market for oil rich nations in the coming year.

The data and statistics used in this article were taken from the September 2017 Accommodation Survey.


ECA’s Accommodation Reports give you all the detail necessary to provide the right housing options for your expatriates. They are available to buy on demand or as part of a data subscription for over 250 locations.

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