Bangkok, Thailand has increased 18.1% in house rental prices on a year-on-year basis, according to JLL.
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Singapore and Hong Kong are generally considered to be Asia’s more vibrant real estate markets. But some up-and-coming cities give these traditional hubs a run for their money, with some even beating them in rental yields.
Among well-known property markets, Hong Kong is the only one to make the top five in a list dominated by lesser-known cities, according to a new report by realty services firm JLL.
“We remain bullish long-term on more established markets like Hong Kong, but in particular we see more pronounced rental growth in some of the more developed markets in the region including Ho Chi Minh City, Jakarta, Bangkok and Manila,” JLL Asia Head of Research -Pacific Officer Roddy Allan told CNBC Make It.
While rents in Asia-Pacific were generally stable in the first quarter of 2024, “supported by durable rental demand for high-quality properties and as return-to-office rates and expatriate arrivals improved,” certain cities experienced sharp growth, according to JLL. report.
The following four cities have led the recovery in rental growth in Asia so far:
Bangkok, Thailand
Residential rental growth in Q1 2024 (y/y): +18.1%
Average price to rent: THB 8,292 (about $226) per square meter per year
“Demand for rent has increased in Bangkok,” Allan said. “Many of the rental gains have been led by the luxury condo sector, but more broadly, rental demand for apartments has skyrocketed due to the prevailing rate environment and the return of tourism and expatriates to Bangkok,” he told CNBC.
“Inflated” selling prices, household debt and strong interest rates are driving rental demand, according to the report.
By the end of 2024, a total of 2,800 units from 12 projects is set to be added to the Bangkok market, which is expected to fuel even more growth, the report said.
Ho Chi Minh City, Vietnam
Residential rental growth in Q1 2024 (y/y): +5.9%
Average price to rent: $120 psm per year
“Vietnam’s biggest city, Ho Chi Minh City, is also one of the (best) markets in the region from a housing perspective,” Allan said.. Rents in the city rose 5.9% annually in the first quarter of 2024.
This rental growth has been influenced by stronger rental prices recorded in new quality offerings in the city, according to the report.
“We are also seeing new supply coming online in the lower price segment and continued rate pressure will help demand,” Allan said.
Jakarta, Indonesia
Residential rental growth in Q1 2024 (y/y): +4.8%
Average price to rent: IDR 3,214,555 (about $200) psm per year
In Jakarta, condominium sales have been quite slow for the past three years and, in 2024, the presidential election is a factor leading to limited sales, according to the report.
Despite the decline in sales, rental demand “remains strong” in the city, particularly at the top end of the market, Allan told CNBC Make It.
“We expect new launches to remain muted in Jakarta throughout 2024 which will lead to demand for quality space throughout the city,” he said.
Manila, Philippines
Residential rental growth in Q1 2024 (y/y): +0.8%
Average price to rent: PHP 9,984 (about $172) psm per year
Manila’s residential rental market rose in Q1, as demand from executives and foreigners continued to rise amid a recovery in return-to-office rates, according to the report.
Leasing demand is expected to remain stable as return-to-office policies improve through 2024, the report said.
While this less well-known market has risen in terms of rents, the more mature Asian market has fallen. Singapore’s residential rental market is in sharp decline, down 15.7% year-on-year. Shanghai has dropped 3% from the previous year.
“Rents in Mainland China remain low because of the number of luxury apartments available for rent,” Allan told CNBC Make It. “Singapore has a similar situation with a lot of new stock,” he said.
“In the longer term, we expect to see a recovery in rents in Mainland China and Singapore due to muted supply and recovery from expatriate demand and more luxury rental housing.”
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