Rents are plunging in oil and gas locations as thousands of expat jobs have been axed worldwide.
Although expats rents have stood still or posted slight increases in many expat cities, those that have fallen saw fast and significant drops.
A report from expat benefits consultancy ECA International highlights how the dramatic ongoing slump in oil prices over the past two years has seen economies dependent on the commodity suffer.
Despite occasional rallies, oil prices have collapsed from more than $100 a barrel in January 2014 to close to $50 just two years later.
In the wake of falling prices, oil and gas companies have cancelled exploration projects and mothballed rigs in a bid to cut costs.
Executives have also slashed work forces to save money.
The result, says ECA International, is rents have fallen or stood still in line with oil prices as fewer workers can pick from a steady supply of homes.
“Many oil and gas companies have been forced to severely cut back on spending in order to alleviate the losses from unprofitable production and shrinking profits,” says the report.
“Production and exploration have been significantly pared down, and thousands of employees have been laid off. These factors have combined to pronounced effect in primary locations in the industry, most of which have seen sharp falls in demand for accommodation as companies have scaled back their assignee numbers.
“As a consequence, landlords have been forced to reduce rents in order to attract tenants from the shrinking expatriate pool, who have also lost some of their premium allowances as a cost-cutting measure.”
Some expats rents rise
Calgary, Canada, is one of the worst off cities, with rents down by almost a fifth, followed by Moscow, where the cost of renting a home tumbled by 14% and Port of Spain, the capital of Trinidad and Tobago, with rents down 11.5%.
The Saudi Arabia capital of Riyadh also suffered an 8.6% rent decrease. Russia and Saudi Arabia are among the world’s largest producers of oil.
Not every city saw rents fall, says the report. International business hubs such as Birmingham and Leeds in Britain and Chicago and Miami in the US also returned increases of around 5%.