Rents in Latin America are going through the roof – rising at double the rate of USA.
Latin American rents surged by 13%, while those in the US average just over 6%.
The high spot in the US last year was San Francisco, California, where rents shot up by 12%. The increase was mainly due to an influx of expats working on technology projects in the city and nearby San Jose.
But the big gains were further south.
Rents in the Venezuelan capital Caracas rocketed by 30% on the back of the country’s booming oil and gas industry.
Road to Rio
Wealthy renters want high-security, modern homes, but the market shows no sign of abating as unfettered inflation stops developers keeping up with tenant demand as building materials are hugely expensive.
Moving further south, Rio de Janeiro, Brazil, reported rent gains of 22% as the government pumps money in to regenerating the city ahead of the World Cup and Olympic Games.
Expat experts ECA Consultants reckon Rio landlords will continue to post similar gains for the next two to three years.
While demand is pulling rents up in Caracas and Rio, the cost for tenants has also risen 11% in Buenos Aires, Argentina. In this city, the increase is explained by rents rising alongside inflation.
“The lesson for investors is to look behind the posted rent increases at the reasons why they are rising,” said an ECA Consultants spokesman.
“The best investments are not necessarily where inflation is driving rents along, but where economic reasons are powering the market.”
The firm also looked at relative rents across the Middle East and found that in the United Arab Emirates, the Dubai and Abu Dhabi markets were closely linked.
UAE commute
Landlords in Dubai enjoyed a 6% increase, while their counterparts in Abu Dhabi wrestled with a 6% drop.
However the main centres in the two emirates are only a two-hour commute apart, which encourages many expats to live in cheaper Dubai accommodation and drive to work in Abu Dhabi.
To counter this, the Abu Dhabi government has decreed that public workers will have to live locally from the end of 2013. The effect may reverse the rent trend as demand shifts from Dubai.
Arab Spring unrest has also played a part in expat rental markets, as foreign workers shunned some suburbs in Cairo, Egypt, and Manama, Bahrain, pushing rents down.
However, some popular neighbourhoods in Cairo still saw a 4% rent rise.
