Rents in Quito dropped over the past year. With supply good and expatriate demand low, properties may be listed on the market for months or even years. While some landlords insist on higher rents even if it means leaving properties vacant, others may be willing to negotiate. Sources believe it is likely that the economy and the property market will pick up after the upcoming presidential election.
The market is facing an oversupply of high-end properties as the economic situation worsens because of the drop in oil prices and the unstable political situation. Many international companies have reduced their staff levels in Nairobi, and some oil and gas companies have left Kenya altogether. Landlords continue asking for high rents, but negotiation may be possible depending on the length of the lease.
Maputo rents decreased over the past year. Properties are still advertised at the same rents as before, but some rents may be negotiated. Fewer assignees have come in over the past year, but demand is still generally steady for the highest quality properties. The supply of apartments is quite good, with several new construction projects completed recently. The supply of houses is much tighter, with very few available in compounds.
Rents are decreasing in the Lagos expatriate rental market due to low demand, countrywide political and economic problems, and lower expatriate budgets. Landlords prefer USD due to the volatility of the Nigerian Naira (NGN), and most expatriates use the parallel exchange rate when signing contracts and paying rent. Many new properties are opening up around the city, but construction has slowed down overall, and some projects have been delayed.
Rents in Dar es Salaam decreased in the past year due to an economic downturn. In addition to lower rents, there is now much more flexibility in payment terms. Formerly tenants had to pay one year’s rent in advance. That is now more negotiable, with some landlords accepting monthly payments. The flow of expatriates has slowed considerably, and the supply of high quality properties overwhelms demand. Demand is decreasing for stand-alone houses as fewer expatriate families are sent on assignment.
Abu Dhabi and Dubai rents fell for apartments and villas over the past year. There is an oversupply of high-end units. Many assignee budgets have been reduced and jobs have been cut. Some landlords stay fixed on high rents, but others who are under pressure to pay a mortgage may negotiate. Some landlords offer incentives, such as one month’s free rent or flexible payment terms. Abu Dhabi now has a 3% Municipal Fee payable on rent. The fee was approved a year ago, and expatriates may receive a retroactive bill for 2016.
Rents in Calgary decreased over the past year. The oil price downturn mixed with an excess of new construction continues to drive prices down. This is a renter’s market. Some landlords are offering incentives and lowering asking rents, while others are leaving their properties empty and waiting for a market recovery.
Selected cities in North America, Central and South America, the Middle East, Africa, and maritime Southeast Asia-Pacific
|St. John's, Antigua|
|Port of Spain, Trinidad and Tobago|
|Cape Town, South Africa|
|Dubai, United Arab Emirates|
|Toronto ON, Canada|
Selected cities in Europe, Asia,
and mainland Southeast Asia
|Prague, Czech Republic|
|Ulsan, South Korea|
In response to market volatility, we will also conduct survey updates in Buenos Aires and Cairo in the second quarter.
Luanda, Angola, often finds itself on the list of the top ten most expensive cities in the world. Lately, Luanda’s inflation has been at its highest point in nearly six years, the rise triggered primarily by low growth due to low oil prices and the resulting very low performance and confidence from the non-oil sector. Angola relies on oil for more than 90% of its export income, and the Kwanza has weakened by more than 50% in relation to the dollar over the past two years as the government has reduced the amount of foreign exchange it makes available to banks and businesses. In addition, rising global oil inventories leave Angola vulnerable to price swings and bleak economic growth. Adding to the uncertainty, Africa’s second-longest serving leader, President Jose Eduardo dos Santos, has repeatedly mentioned that he plans to step down and will not run in the August 2017 election. He has been president for thirty-eight years.
In February, our surveyor found high inflation in multiple categories. The food away from home category and the alcohol and tobacco category showed particularly high inflation compared to our survey six months ago. Many overt symptoms of an uncertain economic environment were apparent as well. Hundreds of people conducted black market exchanges in the open, outside malls, near the airport, and on the streets. The number of employees at the largest car dealership in the city had dropped by two thirds since August, and there was very little on-demand availability at dealerships in general. AIRINC is scheduled to conduct its next on-site survey in Luanda in August, and will continue to monitor the situation.
This quarter’s on-site surveys of the Middle East confirmed the trend of increasing consumer gas prices as oil-rich nations (many of which have historically subsidized national costs) continue to feel the pressure of the global price drop. Consumer gas prices in Abu Dhabi, U.A.E., increased 28% in the past year, while the rate of increase in Muscat, Oman, was 29% and that in Doha, Qatar, 32%. Price increases have been occurring almost every month in Oman, leading residents to protest for the first time since 2011. There have been no such protests in Qatar or the United Arab Emirates, where police are strict, surveillance is high, and crime is low.
One exception seen in our recent quarterly survey was Manama, Bahrain, where the price of gas fell 20% overall, from 0.18 to 0.16 BHD per liter for premium fuel and 0.16 to 0.13 BHD per liter for regular fuel. Shortly before the February 2016 survey, consumer gas prices had nearly doubled in Bahrain, rising from 10 to .18 BHD, an increase that was met with protests at the time. While Bahrain is an outlier, we expect gas prices to continue rising in many countries in the Middle East.
|Country||Currency||Change vs EUR||Change vs USD|
|Democratic Republic of Congo||CDF||-12.90%||-12.60%|
|Buenos Aires, Argentina|
A tax reform package has been implemented in Croatia effective January 1, 2017. Personal allowances have been increased and tax rates have been reduced. The top marginal tax rate of 40% has been reduced to 36%. Social security contributions are unchanged. The net effect of the tax reform package is a reduction in tax for most incomes.
The rate for the state tax (known as the “bottom tax”) has been increased from 9.08% to 10.08%. The local Copenhagen tax rate has been decreased from 27.6% to 26.6%. The deduction for the “top tax” rate has increased from DKK 467,300 to DKK 479,600. The special employment deduction has been increased. The “Green Check” tax credit available to lower income taxpayers has been reduced. The net overall effect on income tax will vary by income level and family size.
Social security rates have increased from 8.97% to 9.33%, the credit for interest has decreased, and the formula for the earned income tax credit has been changed. The national income tax brackets have been adjusted, and the top tax rate has decreased from 31.75% to 31.5%. The net effect will vary depending on income level, but will generally be an increase in social security for all incomes and a small decrease in tax for most taxpayers.
Social security rates are unchanged for 2017. The 3% solidarity surcharge on incomes exceeding EUR 300,000 expired at the end of 2016 and no longer applies for 2017. The regional tax rate schedule for Rome (Lazio) has been updated. The net effect for most taxpayers is a decrease in tax on incomes exceeding EUR 300,000. There is also a small decrease in regional tax for Rome taxpayers.
The maximum contribution for state pension included in social security has been eliminated. Since social security contributions are deductible, the net result is an increase in social security and a decrease in income tax for those with income above RON 162,000. The change in social security contributions is effective February 1, 2017.