Corporate relocation has returned with a bang.

Following a challenging two years for the sector, with international business travel stalled and assignees finding themselves stuck in their home or host countries during the pandemic, many borders have now reopened, and assignee lifestyle has (somewhat) returned to normal.

However, while normality is returns assignees are settling back into their pre-COVID locations or beginning new assignments, the mobility landscape has shifted. New locations have overtaken others in terms of popularity, and external factors are impacting the ease of assimilation into new areas. A shortage of assignee housing around the world has ensued, and this is causing significant challenges for global mobility teams.

In our latest blog series, we have gathered insights from global mobility and housing experts around the world to explore the state of assignee housing in 2023 – and the key trends that are creating challenges for those relocating. We are kicking off by exploring housing issues in the the Asia Pacific (APAC) region.

A slow construction sector

One of the main culprits for the housing shortage, under any circumstance, is a lack of new construction to meet growing demand, and this is certainly the case in APAC. In many parts of the region today, the housing construction landscape seems – in a word – bleak.

Factors such as labour shortages and supply chain issues have contributed to recent lapses in the development of new housing, making it challenging and more costly for construction companies to access important resources, skills and building materials.

This has contributed largely to the limited supply of housing for new and returning assignees, leaving them disappointed and displaced – and global mobility teams with a headache.

Global mobility teams placing assignees in Australia, for example, are currently grappling with a severe lack of housing stock due to a major slowdown of the construction industry. And for those relocating to India and Malaysia, housing demand far outweighs the current supply, (no) thanks to a similarly-slowing construction sector.

There is, however, a glimmer of hope in other areas of the APAC region, where our experts have reported more positive conditions. In countries such as Indonesia, Thailand, Vietnam, Cambodia and Myanmar, increased construction of apartments has somewhat lessened housing issues for assignees, despite overall availability remaining fairly limited.

It’s clear that, for mobility and HR leaders, keeping a finger on the pulse of global construction markets will be crucial for informing global mobility strategies in 2023 (and beyond).

Post-pandemic demand

The aftermath of the pandemic has had a significant impact all over the globe – particularly for employees venturing abroad and seeking housing. The easing of COVID border restrictions in countries such as Singapore, and the relaxation of ‘zero COVID’ policies in places like China, presents an attractive opportunity to assignees. In some parts of APAC, the picture looks promising. Since the tail-end of 2022, following an influx of new arrivals mainly from Hong Kong and China, Singapore’s property market has grown stronger in comparison to other cities in APAC, with signs of a gradual upward trend in both the sales and leasing market.

Singapore has always been one of the best places to live in Asia for assignees due to its sound economic policies, state-of-the-art public facilities, and stable political climate.

– Min Fu Lim, Client Services Director at Crown Worldwide Group – Asia, Middle East & Oceana

But how sustainable was the 2022 boom in Singapore’s housing market? Housing experts have been wary of the effects eased restrictions will have on housing availability as properties are rapidly being snapped up. Since June 2023, there has been a cooling in the Singapore market, as the skyrocketing rents driven by the new arrivals, plus tightening of visa regulations, has impacted the housing market. In Japan and Indonesia, the recent easing of border restrictions post-COVID also sparked a nosedive in available housing supply due to more international employees coming in, and therefore, higher demand.

And interestingly, in South Korea, this situation was reversed. It was assignees who extended their assignments during COVID and opted to rent apartments, meaning that Korean residents returning home as border restrictions eased were greeted with the limited options when it came to housing.

In India, employees have returned pre-lockdown levels of office working, and this – paired with the easing of border restrictions and returning assignee population – has created a mismatch of supply vs. demand, as both groups search for conveniently located, permanent housing.

Similarly, Hong Kong has experienced an increase in family housing inquiries in the wake of COVID restrictions being lifted. Since April, however, larger properties have been leased t a quickening pace, hinting that recovery is on the horizon for the Hong Kong housing market.

“We believe the market will continue to rebound in a slow but steady trend and expect it to return to pre-Covid levels in the second quarter of 2024.”

– Steven Hui, Crown World Mobility

Different house-hunting culture

In addition to these large, overarching issues contributing to the housing shortage, different house-hunting ‘norms’ and processes, unique to the APAC region, can create a additional challenges when locating housing for assignees.

Let’s take landlord relationships as an example. In India, landlords can be very particular in their choice of tenants, sometimes asking prospective tenants to share a profile to help them make an informed decision, which can be a rigorous and complicated task for those arriving to the country for the first time. Tenants are also usually held solely responsible for general maintenance in rented properties, which creates risk for those renting older properties that may come with existing wear and tear.

Soaring rents

Overall, the lack of housing supply, surge in demand, and imbalance of power between landlords and tenants have not only contributed to a dwindling of housing options for assignees, but also an increase in rental rates. In South Korea, for example, when a current tenant renews their contract, they must pay on average around a 30% higher monthly rental fee than the previous contract, often forcing some to seek cheaper housing elsewhere in an already highly competitive market. In Indonesia, rent prices have soared compared with pre-COVID levels, and since the competition is so tight to secure a property, landlords are seizing the opportunity to charge more and wasting no time waiting for tenants to settle the deposit. Instead, they are operating on a brutal first come, first served basis.

These skyrocketing rent increases are a sure-fire sign of overall housing shortage crisis across APAC. From South Korea, where the collapse in housing supply has led to an increase in property purchase prices in central Seoul of 25-30% per year, all the way to Malaysia, where post-pandemic rental fees have increased by 10% for all types of property. Japan seems to be suffering a similar fate, too.

There has been a 10% rent increase on both permanent and temporary residences after the ease of border restriction. Request to increase on housing allowance, or accommodating at hotels rather than temporary residences, are the solutions.

– Hiroki Naoyoshi, Crown World Mobility

However, in Hong Kong, landlord sentiments seem slightly more optimistic for 2023 as rental rates in the immediate term are expected to remain stable. Yet, competition amongst tenants is still stiff, and those seeking to rent must act fast.

 

Looking to the future

Given these challenges, what can global mobility teams keep in mind when relocating employees?

It’s crucial to become as familiar as possible with local markets, each of which poses problems of its own from a housing perspective that has the potential to affect the employee relocation experience.

Equipping assignees with sufficient support, managing expectations, and engaging experts can all help relocating staff to navigate these challenges.

Keen to learn more about the trends that have emerged as we continue to adapt to a hybrid working policy?

If you want to learn more about how leaders in the employee mobility sector are developing flexible working strategies for employees on assignment, make sure to download your copy of the Mobility Trends 2023 report here.

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