In this piece, we will take a look at the 30 most expensive cities around the world to rent an apartment. For more cities, head on over to 5 Most Expensive Cities Around the World to Rent an Apartment.
Rental costs have been one of the biggest contributors to inflation, which has impacted both developed and developing economies. The housing market was first shaken due to the coronavirus pandemic. Lockdowns and work from home trends changed the industry dynamics. Researchers from the University of California in a freshly published research paper share that the relocation trends due to remote work indicate that workers who had previously worked in urban areas preferred to move to cheaper suburban areas if they were allowed to work remotely full time.
This shift also sees the workers move from high productivity cities to low productivity areas, but interestingly, it also features a classic illustration of the age-old adage of ‘the grass is always greener on the other side.’ This is because the researchers discovered that while workers in urban areas preferred a suburban environment, those in the suburban areas preferred the amenities of city life and moved to urban areas even though the rents were higher. A report from the National Bureau of Economic Research (NBER) also corroborates these conclusions, describing them as a ‘donut effect’ where city centers hollow out as people shift outwards to the suburban areas of the same cities. The NBER adds that in the post pandemic work environment, people will most likely follow a hybrid working model, where they commute to work for some days while staying home for others.
Researchers from Princeton, Georgetown, University of California, and Columbia share that this trend of well established and high income workers moving away from city centers is likely to affect the services industry since they often spend large amounts of money at these establishments. They share that rents in areas with high proportion of business service workers dropped in the wake of the pandemic, and this decline in rental prices started from March 2020 and persisted until January 2021. They add that this outward migration can also help drive down rents in city centers over the long term.
However, while the rents dropped until 2021 start, what happened next? Well, as expected, they went up. At least this is what a report from Knight Frank shows. Their report for the third quarter of 2022 shows that during the twelve-month period ending in Q3 2022, global prime rents grew by 10.2%, with London leading the charge through a 19% annual growth in Q3 which had nevertheless slowed down from the 27% growth in Q2. Overall, prime rental growth peaked at 11.9% in Q1 and ended up slowing down in the third quarter. Knight Frank’s report for the fourth quarter says prime rent growth increased slightly to 10.3% with Singapore’s rents growing by a whopping 28%. This six consecutive quarters of rental growth came after four quarters of consecutive drops, where prime trends dropped by as much as 5% during the fourth quarter of 2022.
The management of AvalonBay Communities, Inc. (NYSE:AVB) which has apartment buildings in cities such as New York and Washington D.C., shared during its earnings call for the fourth quarter of 2022:
After a very strong first half of the year, we ended 2022 with several of our key operating metrics, including occupancy, availability and turnover trending to what we consider more normal levels. In addition, following two years of abnormal patterns, rent seasonality returned with peak values being achieved during Q2 and Q3 before easing in the back half of the year. More recently, the volume of prospective renters visiting our communities increased in January as compared to what we experienced in November and December, which translated into a modest lift in occupancy, and we do see amount of available inventory to lease as we entered February.
Additionally, asking rents have increased about 100 basis points since the beginning of the year, which is beginning to flow into rent change. Based on signed leases that take effect in February, we’re expecting like-term effective rent change to be in the low-4% range. Turning to slide 13. The midpoint of our outlook reflects same-store revenue growth of 5% for the full year 2023. Growth in lease rates is driving the majority of our revenue growth for the year, which includes 3.5% embedded growth from 2022 and an expectation of roughly 3% effective rent growth for 2023, which contributes about 150 basis points to our full year growth rate. We expect additional contributions from other rental revenue, which is projected to grow by roughly 16%, about two-thirds of which is driven by our operating initiatives, a modest improvement in uncollectible lease revenue and a slight tailwind from the reduced impact of amortized concessions.
With these details in mind, let’s take a look at some of the most expensive cities in the world to rent an apartment.
GagliardiImages/Shutterstock.com
Our Methodology
To compile our list, we used Numbeo’s cost of rent index to pick cities that have the highest rents. Numbeo’s data has been used by several publications such as Time Magazine and Business Insider and its methodology can be seen here.
Most Expensive Cities Around the World to Rent an Apartment
30. St Helier, Jersey
Cost of Rent Index Score: 55.2
St Helier is a city in Jersey with a small population of 35 thousand people. It is the capital of Jersey and covers an area of 10.6 kilometers square.
29. Nashville, Tennessee, US
Cost of Rent Index Score: 55.7
Nashville is the capital city of Tennessee and has 689,447, which also makes it the most populous city in Tennessee.
28. Chicago, Illinois, US
Cost of Rent Index Score: 56.0
Chicago is one of the largest cities in America in terms of population as it houses almost three million people.
27. Sydney, Australia
Cost of Rent Index Score: 56.2
Sydney is the most populous city in Australia and an economic hub in the country and houses a large number of multinational companies.
26. Raleigh, North Carolina, US
Cost of Rent Index Score: 56.4
Raleigh is the capital city of North Carolina which is the most populous city in the state. It is a logistics hub in the state.
25. St. Petersburg, Florida, US
Cost of Rent Index Score: 57.0
St. Petersburg is one of the smaller cities on our list with a population of a little over a quarter of a million people.
24. Tampa, Florida, US
Cost of Rent Index Score: 59.4
Tampa is a coastal city in Florida and it houses Florida’s largest port responsible for most of the shipments through the state.
23. Charlotte, North Carolina, US
Cost of Rent Index Score: 59.7
Charlotte is the most populous city in North Carolina with a population greater than 800 thousand. It has one of the largest banking sectors in America.
22. Fort Lauderdale, Florida, US
Cost of Rent Index Score: 61.3
Fort Lauderdale is another coastal city in Florida. Due to its port, the city is known for its vibrant yacht industry.
21. Dublin, Ireland
Cost of Rent Index Score: 61.6
Dublin is the capital city of the Republic of Ireland.
20. Honolulu, Hawaii, US
Cost of Rent Index Score: 62.0
Honolulu is the capital city of Hawaii, and also the most populous city in the state. It has a vibrant tourism industry.
19. Hong Kong, Hong Kong
Cost of Rent Index Score: 64.1
Hong Kong is both a city and a special territory. It is one of the wealthiest cities in the world.
18. Austin, Texas, US
Cost of Rent Index Score: 65.1
Austin is the capital city of Texas. It houses close to a million people and houses technology firms such as Apple, AMD, Arm, and others.
17. Zug, Switzerland
Cost of Rent Index Score: 66.5
Zug is a city in Switzerland that is one of the oldest on our list with a history dating back tens of thousands of years.
16. Zurich, Switzerland
Cost of Rent Index Score: 69.0
Zurich is the largest city in Switzerland which houses close to half a million people. It is also one of the most prosperous cities in the world and houses big banks and large financial firms.
15. Geneva, Switzerland
Cost of Rent Index Score: 69.0
Geneva is the second most populous city in Switzerland.
14. London, United Kingdom
Cost of Rent Index Score: 69.5
London is the capital city of the U.K., and is known to have some of the most priciest real estate in the world.
13. Seattle, Washington, US
Cost of Rent Index Score: 69.6
Seattle is an economic hub in Washington and houses several large technology and other firms.
12. Washington, D.C., US
Cost of Rent Index Score: 70.9
Washington D.C. is the capital city of the U.S. and is known for some of the highest living costs in America.
11. Miami, Florida, US
Cost of Rent Index Score: 72.1
Miami is an economic hub in Florida and has the largest cruise ship port in the world.
10. Los Angeles, California, US
Cost of Rent Index Score: 72.3
Los Angeles is one of the largest cities in the U.S. in terms of population and an economic and cultural hub.
9. San Jose, California, US
Cost of Rent Index Score: 74.2
San Jose is one of the largest cities in California and a technology hub with dozens of firms.
8. Oakland, California, US
Cost of Rent Index Score: 74.3
Oakland is a major port city in California and has one of the busiest ports in America.
7. Boston, Massachusetts, US
Cost of Rent Index Score: 75.2
Boston is the capital of Massachusetts and an economic and technological hub in the state and America.
6. George Town, Cayman Islands
Cost of Rent Index Score: 76.4
George Town is the capital city in the Cayman Islands with a population of a little under 35,000.
Click to continue reading and see 5 Most Expensive Cities Around the World to Rent an Apartment.
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Disclosure: None. 30 Most Expensive Cities Around the World to Rent an Apartment is originally published on Insider Monkey.