Not New York, Singapore or London—these Indian cities spend the most on rent worldwide

While New York, London, Zurich and Singapore are often cited as some of the ‘most expensive’ cities in the world in terms of cost of living, the picture is somewhat different when looking solely at how expensive it is to rent an apartment: surprisingly, while global hubs remain expensive, some Indian and Asian cities are much less affordable when it comes to renting. According to a new report by German asset manager DWS, it’s not New York, or London or Singapore that has the least affordable rental properties in the world: it’s Bangkok, Mumbai and Mexico City. In its analysis of 80 cities around the world, the German asset manager used median income and average rent to calculate rental property affordability, ie the percentage of median income that goes into paying rent. The analysis found that, on average, households allocated 38% of their income to rent this year, a figure that exceeded the generally accepted 30% threshold. Using this method, DWS found that Bangkok was by far the most expensive in terms of rent, with residents in the Southeast Asian city spending almost four-fifths or 79% of their income on rent. India’s financial capital, Mumbai, was found to be the second most unaffordable city in terms of rent, with residents spending a whopping 66% of their salaries on rent. The third and perhaps most surprising entrant in the top three was Mexico City, which was also found to have an acute affordability crisis with residents spending more than two-thirds of their income on rent. Global hubs such as Hong Kong (61%), New York (53%) and London (52%) also featured among the 10 least affordable cities in the analysis, their relatively lower positions attributable to much higher incomes. Indian cities becoming unaffordable? Mumbai’s position as second is somewhat surprising, but not entirely unexpected: India’s financial capital has long been notorious for sky-high property prices and, by extension, rents. What is perhaps more interesting is the presence of other Indian cities in the list: four Indian urban centers, including Mumbai, appear among the 29 cities in the world where residents spend more than 40% of their income on rent. India’s Silicon Valley Bengaluru is the 19th most expensive city in the world in terms of rent, with Chennai following close behind. being the 20th most expensive. Interestingly, even Kolkata, which is generally considered to have a low cost of living, makes the most expensive cut, beating the likes of global destinations like San Francisco, Boston, Munich, Stockholm and Frankfurt. Most to least affordable cities in terms of affordability of rent. While four of the five Indian cities on the list fall in the bottom half of affordability, there is one that also makes the ‘most affordable’ cut. DWS found India’s national capital, Delhi, to be the 20th most affordable city in the world in terms of rent, and the only Indian city with a “high affordability” rating. But, one might ask, how are Indian cities less affordable than a San Francisco or a London, which have notoriously high costs of living? Well, the answer lies in the method. The income gap Because the analysis used median income and average rent to calculate affordability, several Indian cities made the ‘unaffordable’ cut. Despite India’s growing and gigantic economy, the per capita income in the country still remains far below that of developed economies. In simple terms, while renting in San Francisco or London can be very expensive in terms of absolute numbers, the higher median incomes in these cities offset this: to illustrate, a household that earns $10,000 and spends $4,000 annually on rent spends much more of their income on rent than a household that earns $100,000 and spends $25. This leads us to the next question. After paying rent, how much of the income remains with households to be spent on other things? A crisis for disposable income When it comes to disposable income (in this context, median income minus average rent), Indian cities have fared badly. Chennai, Mumbai and Kolkata were ranked fourth, fifth and sixth lowest respectively in terms of financial capabilities after rent, while Bengaluru was ninth. On the other hand, cities such as Singapore and San Francisco, despite having much higher rents in absolute terms, were at the top in terms of financial capacity after rent, reflecting the very high median incomes of residents there. Post-lease financial capabilities (disposable income) across global cities. Regional Patterns The analysis found that several US cities appear on the more affordable end of the spectrum, with Salt Lake City (20%), Austin (23%), Dallas (24%) and Atlanta (25%) being among the most affordable US cities. Outside the US, Australian cities such as Brisbane and Melbourne, as well as European cities such as Leipzig, Lyon, Lille, Stuttgart, Budapest and Zurich were also among the most affordable. Overall, the analysis found that North American and Australian cities generally performed well in terms of affordability, while European cities showed mixed results. However, mainland Asia lagged behind, with below-average performance in terms of housing affordability.