Vol. XXII, No. 180 [ BusinessWorld Online ]
Thursday, April 16, 2009 | MANILA, PHILIPPINES
MANILA HAS BECOME relatively more expensive for expatriate workers in terms of housing, above several First World cities and even neighboring Bangkok, a Mercer survey found.
Currency fluctuations have played a role in Manila’s rise in the rental rankings.
Currency fluctuations have played a role in Manila’s rise in the rental rankings.
The Philippine capital, however, remains in the bottom fourth (at 40th from 45th previously as of September 2008) in a list of 50 expatriate destinations ranked in terms of rental property costs.
Moscow was judged the costliest, keeping its 2008 ranking, followed by Tokyo, Hong Kong, Mumbai, and New York which was used as the base city.
Beijing, Geneva, New Delhi, London, and Singapore rounded out the top ten.
The only cities judged as cheaper than Manila were Brussels, Buenos Aires, Budapest, Bangkok, Stockholm, Prague, Jeddah, Toronto, Mexico City, and Johannesburg.
Actual costs were not detailed, but a statement by Mercer’s Philippine unit said the rankings were based on typical rents for one- to four-bedroom apartments and three- to four-bedroom houses.
Mercer said higher rankings did not necessarily mean property prices had actually increased. It said currency fluctuations — particularly volatile in the past few months due to the global downturn — have also had a "strong impact".
"In recent months, much of the movement in the rankings can be attributed to currency fluctuations," the statement quoted Mercer senior associate Marie-Laurence Sepede as saying.
"Looking ahead over the next few months, we would expect to see a general decline in rental prices due to the economic slowdown. Multinational companies should closely monitor these changes so as not to lose out on opportunities for savings," she added.
Puneet Swani, Mercer head of information product solutions for ASEAN, said rent in most cities in the region "remain comparatively stable compared to sharp falls in American and European cities, which accounts for the relatively higher rankings..."
He did not expect postings to increase, saying that "despite falling rental property costs in most of ASEAN, the difficult economic situation will still likely result in an overall decrease in expatriate assignments across the region."
"That said, ASEAN as a region continues to grow and remains a relatively good area for multinationals to invest and grow their business during this downturn," Mr. Swani added.
"It will be interesting to see what 2010 brings for the housing market in ASEAN, but if current conditions are any indication, we may see Singapore continue to move down, with other ASEAN countries either maintaining the same position or moving up marginally in ranking."
Commenting on the report, Global Property Guide economist Prince Christian R. Cruz agreed that Southeast Asian cities had risen in the rankings due more to the drastic fall of rental rates in countries hardest hit by the economic downturn.
"With most economists expecting the economic downturn to affect Asia this year, I don’t see the trend of Asian cities being more expensive than Europe continuing," he said.
For his part, Colliers International research manager Ramon Jose E. Aguirre said there was still downward pressure on local residential rental rates.
"Rental rates and existing condominiums would face stagnant prices due to the increase in developments ... so no room for increases," he said.
He noted that vacancies in Makati were up 9% from 8.1% last year.
Claro G. Cordero, research head of Jones Lang La Salle Lee Chiu, said rental rates for luxury residential units may still hold since the local expat population remained significant.
"If there would be impact on rents, the earliest [it would be felt] would be early next year, if we continue to experience a downturn," he said.
The Mercer survey, which involved 300 cities, provides multinational firms information on rental prices for their expatriate employees in major commercial centers. — D. G. K. Carreon
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