Bangkok, Thailand saw 18.1% growth in residential rental prices year-on-year, according to JLL.
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Singapore and Hong Kong are generally considered two of the most vibrant real estate markets in Asia. But some up-and-coming cities are giving these traditional centers a run for their money, and some are even beating them in rental yields.
Among well-known and established property markets, Hong Kong was the only one to make it into the top five in a list dominated by lesser-known cities, according to a recent report by real estate services firm JLL.
“We remain optimistic long-term in more established markets such as Hong Kong, but primarily we are seeing notable rental growth in some of the region's more developed markets including Ho Chi Minh City, Jakarta, Bangkok and Manila,” JLL head of research for Asia And the Pacific Ocean. Officer Rudy Allen told CNBC Make It.
While rents in the Asia-Pacific region were largely stable in the first quarter of 2024, “supported by resilient rental demand for high-quality properties and with improved rates of office returns and expatriates,” some cities saw sharp growth, according to JLL. . a report.
The following four cities have led Asia's rental growth rebound so far this year:
Bangkok, Thailand
Residential rental growth in the first quarter of 2024 (YoY): +18.1%
Average rental price: 8,292 THB (about $226) per square meter per year
“Demand for rentals in Bangkok has risen,” Alan said. “Much of the rental gains have been led by the luxury apartment sector, but more broadly, demand for rental apartments has risen significantly due to the prevailing price environment and the return of tourism and expatriates to Bangkok,” he told CNBC.
“Inflated” sales prices, household debt and strong interest rates have led to increased demand for rentals, the report said.
By the end of 2024, a total of 2,800 units from 12 projects are scheduled to be added to the Bangkok market, which is expected to further boost rental growth, the report said.
Ho Chi Minh City, Vietnam
Residential rental growth in the first quarter of 2024 (year-on-year): +5.9%
Average rental price: USD 120 per square meter per year
“Ho Chi Minh City, the largest city in Vietnam, was also one of the (best) performing markets in the region from a residential perspective,” Alan said. Rents in the city grew by 5.9% year-on-year in the first quarter of 2024.
This growth in rents has been influenced by higher rental prices recorded in new, high-quality offerings in the city, according to the report.
“We are also seeing new supplies arriving in the lower price segment and continued price pressures will help demand,” Allan said.
Jakarta, Indonesia
Residential rental growth in the first quarter of 2024 (year-on-year): +4.8%
Average rental price: IDR 3,214,555 (about $200) per year
In Jakarta, residential sales have been very slow over the past three years, and in 2024, the presidential election was a contributing factor to limited sales, according to the report.
Despite the slowdown in sales, rental demand “remains strong” in the city, especially at the upper end of the market, Alan told CNBC Make It.
“We expect new launches to remain muted in Jakarta throughout 2024 which will boost demand for quality spaces across the city,” he said.
Manila, Philippines
Residential rent growth in the first quarter of 2024 (on an annual basis): +0.8%
Average rental price: Php 9,984 (about $172) per year
Manila's residential rental market grew in the first quarter, as demand from executives and foreigners maintained its steady rise amid a rebound in office returns, according to the report.
The report said that rental demand is expected to remain stable as return-to-office policies improve further until 2024.
While these less popular markets have seen a recovery in terms of rents, more mature markets in Asia have declined. Singapore's residential rental market declined sharply, down 15.7% year-on-year. Shanghai fell 3% from the previous year.
“Rents in mainland China are still a bit low due to the number of luxury apartments available for rent,” Alan told CNBC Make It. “Singapore has a similar situation where there is abundant new stock,” he said.
“Longer term, we expect to see a recovery in rents in mainland China and Singapore due to weaker supply, an expatriate recovery and broader demand for luxury residential rentals.”
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