Published on and written by Cyril Jarnias
Moving to Palau means accepting life at the end of the world, at the heart of a picture-perfect archipelago where the sea dictates the rhythm of the days. For the few hundred expatriates who have chosen this Pacific Republic as their new home port, the key question is simple: in which neighborhoods to live, and for what kind of life?
Professional life, social life, and essential services (schools, commerce, healthcare) for expatriates are primarily concentrated around Koror and, secondarily, on the island of Babeldaob where the capital Ngerulmud is located. These two hubs offer the majority of residential options.
Far from the tourist guides that only praise the dive sites, this overview focuses on the reality of daily life: rent levels by neighborhood, access to services, atmosphere, transportation, safety, and even investment potential. With an additional constraint: in Palau, the housing market is limited, expensive for the region, and largely structured by tourism. Suffice it to say that choosing your neighborhood well is no trivial matter.
Koror, the beating heart of expat life
For the vast majority of foreigners, Koror is the gateway, the workplace, and the place where, sooner or later, one ends up unpacking. The former capital concentrates more than half of the country’s population, the bulk of the hotels, restaurants, administrative services, and telecommunications infrastructure. It is also where the expatriate community, small but close-knit, structures itself.
From a practical standpoint, Koror has a huge advantage: everything is within reach. You’ll find the offices of the Palau National Communications Corporation (PNCC) to set up home Wi-Fi, banks like Bank of Hawaii to open an account, schools—including an international institution—and the Belau National Hospital in Meyuns for essential care and the hyperbaric chamber for divers. For a newcomer, this network of services makes all the difference.
Financially, Koror remains—on a regional scale—an expensive but manageable city, especially when compared to major Western capitals. The cost of living is estimated to be about 53% lower than in the United States, while still remaining above the global average. However, on a Pacific scale, prices are significantly higher than in other archipelagos, largely due to the massive dependence on imports.
The average monthly rent for a one-bedroom apartment downtown, which can range from $450 to $1,000.
Here is an overview of the average rents observed in Koror based on location and housing size:
| Housing Type | Location | Average Monthly Rent (USD) | Range (USD) |
|---|---|---|---|
| 1-bedroom Apartment | Koror City Center | 750 | 450 – 1,000 |
| 1-bedroom Apartment | Outside City Center | 550 | 250 – 800 |
| 3-bedroom Apartment | Koror City Center | 1,766.67 | 1,000 – 2,500 |
| 3-bedroom Apartment | Outside City Center | 966.67 | 900 – 1,000 |
| General Range (Apartments) | Koror (All Areas) | — | 350 – 1,200 |
Beyond these numbers, Koror is characterized by a limited housing supply, heavily demanded by hotels, tourist accommodations, and companies that sometimes house their foreign employees. Result: for an expatriate arriving without a network, finding a decent apartment at a good price can take time. Hence the importance of local Facebook groups like “Palau Buy, Sell and Trade” or “Koror Deals & Events,” platforms like Airbnb or specialized rental sites, and, above all, word of mouth within the small expat community.
Koror’s micro-neighborhoods: where do expatriates live?
Koror is not divided into neighborhoods in the European sense, but several areas come up in discussions among foreigners. Each has its profile, advantages, and limitations.
Koror Center and “Downtown”
The urban heart of Koror, sometimes referred to as “downtown,” is the most sought-after area by newcomers. You’ll find offices, many shops, museums (Belau National Museum, Etpison Museum), some of the hotels, and a good number of restaurants catering to foreign visitors.
Living in this area means betting on convenience: no need for a car to go to the supermarket, a bar, or the telecom operator. Access to the PNCC network for fixed internet is relatively straightforward here, and power or network outages, frequent on a small island, are generally better managed than elsewhere.
Apartments in the city center cost 20 to 30% more than in outlying neighborhoods. This increase is amplified by tourist pressure, with many buildings converted into hotel residences or short-term rentals, thus reducing the supply of year-round housing.
For a digital nomad or a manager on assignment for a few months, this extra cost often remains acceptable, especially since transportation costs are low: most trips can be made on foot or within a few minutes by car.
Malakal: the maritime and festive neighborhood
Right next to Koror, Malakal Island is connected by a bridge and hosts a good part of the nautical activity: marinas, dive shops, restaurants with lagoon views. This is where you find iconic spots like Drop-Off Bar & Grill or the bar at Sam’s Tours dive center, regular meeting places for the expatriate community.
Malakal’s housing attracts mainly professional divers, employees of nautical centers, and those who want to live as close to the sea as possible. The atmosphere is more relaxed than in Koror’s center, with a real social life focused on boat trips, evenings among divers, and sunsets over moored boats.
Rents are generally comparable to those in the center, but the properties are more varied: small units above shops, older houses, crew cabins… For an expatriate working directly in the marine tourism industry, Malakal is often an obvious choice.
Ngerbeched, Ngermid, other residential hamlets
Around the urban core of Koror proper, several residential hamlets like Ngerbeched or Ngermid host a mix of Palauan families, workers from Asia, and a small number of long-term foreigners. These areas offer a more local atmosphere, less marked by tourism, while remaining a short drive from the main shops.
The main advantage of neighborhoods slightly removed from the tourist center is a more advantageous cost/space ratio. You generally find larger apartments at softer prices, or even small single-family houses. These zones represent an interesting compromise for an expat family with children in school in Koror or for a couple ready to accept a quieter pace of life.
Hotels and guesthouses, false alternatives and true stepping stones
Koror concentrates the majority of the country’s hotels. For a tourist, that’s an advantage. For an expatriate, it’s a transitional option. In the high-end segment, some rooms can go up to $300 per night. In the long term, this model is not viable for most budgets.
On the other hand, small guesthouses or boarding houses often serve as a first foothold for newcomers who haven’t yet found a rental. Rates remain high on a regional scale, but are more affordable than large hotel complexes. Many expatriates spend a few weeks there, time to activate their networks, scour listings, and find an apartment or shared accommodation.
For digital nomads and remote workers, another solution is gaining ground: coliving, often coupled with coworking spaces like DOUREOR in Koror. This type of structure offers private rooms, common spaces, and an internet connection generally more stable than in individual housing, with an overall price lower than a hotel of equivalent comfort.
Living in Babeldaob: the expat “countryside”
Facing Koror, the island of Babeldaob stretches about forty kilometers, making it the second-largest landmass in Micronesia after Guam. This is where the political capital Ngerulmud is located, in the state of Melekeok, as well as several villages and iconic natural areas.
For an expatriate, Babeldaob represents another way of life in Palau: more space, more nature, less traffic, but also fewer services immediately nearby. Compared to Koror, the island plays the role of “countryside” where one can live in a simple house, more integrated into local life, at the cost of an almost total dependence on the car.
Melekeok and Ngerulmud: political capital, quiet life
Melekeok is a peaceful coastal village with a long beach and open views of the Pacific. Inland, Ngerulmud, the administrative capital and one of the smallest in the world in terms of population, houses the main government buildings, including an imposing neoclassical complex.
For expatriates working in public institutions, NGOs, or cooperation projects, residing on the island of Babeldaob, near Ngerulmud, reduces commute times. This region offers a calm environment, away from the relative bustle of Koror, and direct access to the island’s natural landscapes, notably waterfalls like Ngardmau, lakes, forests, and archaeological sites.
The rental offer here is, however, more limited than in Koror, and consists more of single-family houses than apartments. You live farther from international schools, museums, and the main hospital, even though the so-called “Compact Road” circles the island and allows for a reasonable travel time to Koror.
Airai: between the airport and traditional villages
At the southern tip of Babeldaob lies the state of Airai, home to the Roman Tmetuchl International Airport – the only real air gateway to the country. Airai is also known for its “bai,” a traditional meeting house among the oldest in the archipelago.
Babeldaob Island primarily interests two types of expatriates: professionals working in sectors like aviation, logistics, or infrastructure, and those seeking a balance between proximity to Koror’s services and a more rural living environment. Connection is ensured by the bridge linking Babeldaob to Koror, facilitating travel, although personal cars remain an essential means of transportation on site.
In terms of housing, you find more houses than apartments, often simpler, sometimes locally built, with a village environment. Prices tend to be lower than in Koror’s center, but the formal supply, listed on platforms, is limited: many transactions happen through local contacts or word of mouth.
Ngarchelong and northern Babeldaob: nature, culture, isolation
At the very north of Babeldaob, the state of Ngarchelong and its village of Ollei are home to major cultural sites, like the monoliths of Badrulchau or the stone fish traps. It is also the gateway to excursions to Kayangel Atoll.
In this sparsely populated sector, expatriates are rare and rather motivated by specific projects: marine conservation, research, community projects. Housing is modest, often integrated into the local community. Distances to Koror’s services are significant, and public transportation is non-existent. This offers a radically different version of expat life: near-total immersion in local culture, at the price of a certain solitude.
Cost of living: what each neighborhood means for your budget
Regardless of your residential area, the main budget lines don’t change: housing weighs heavily, imported food drives up the bill, internet remains expensive, but daily transportation is rather affordable.
For a “digital nomad” profile settled in Koror with an expat lifestyle, the total monthly cost is estimated around $3,040. A local resident, with a more frugal lifestyle, is more around $870. For a tourist, the per-stay calculation (1 to 14 days) results in an average cost of about $160.
Breaking down by expense categories, we get the following order of magnitude for Koror:
| Expense Category | Typical Monthly Cost (USD) – Range |
|---|---|
| Housing | 350 – 1,200 |
| Electricity / Water | 80 – 150 |
| Internet & Mobile | 40 – 70 (indicative budgets) |
| Grocery Shopping | 200 – 450 |
| Transportation | 60 – 150 |
| Outings / Restaurants | 60 – 600 |
| Leisure / Activities (diving, excursions) | 30 – 120 |
| Health Insurance | 50 – 200 |
| Visa & Legal Fees | 0 – 100 |
Retail prices confirm this picture: many everyday products are more expensive than in mainland Southeast Asia. A gallon of milk is around $9.97, a dozen eggs $5.97, and a pound of tomatoes hovers around $7.50. On the other hand, some staples like rice remain very cheap.
The maximum price for a three-course dinner for two at a mid-range restaurant.
Here are some basic prices noted in Koror:
| Product / Service | Average Price (USD) | Range (USD) |
|---|---|---|
| Simple meal at an inexpensive restaurant | 12.00 | 8.00 – 25.00 |
| Meal for 2 at a mid-range restaurant (3 courses) | 75.00 | 65.00 – 75.00 |
| Typical McMeal or equivalent combo | 10.00 | — |
| Local draught beer (0.5 L) | 1.50 | 1.00 – 2.20 |
| Cappuccino | 4.08 | 1.00 – 5.00 |
| Milk (1 gallon) | 9.97 | 7.95 – 12.00 |
| Eggs (12) | 5.97 | 4.50 – 8.40 |
| Chicken (fillets, 1 lb) | 6.30 | 4.59 – 8.00 |
| Beef (1 lb) | 8.73 | 7.50 – 9.95 |
| Water bottle (1.5 L) | 1.67 | 1.50 – 2.00 |
| Gasoline (1 gallon) | 6.75 | 5.58 – 7.97 |
| Fixed Internet 60 Mbps+ (monthly) | 129.50 | 60.00 – 199.00 |
| Mobile plan 10 GB+ (monthly) | 51.50 | 26.50 – 90.00 |
Location within Koror or on Babeldaob influences these costs less than the chosen lifestyle. An expat settled downtown, who eats out a lot and multiplies dives and excursions to the Rock Islands, will see their leisure bill swell faster than a resident tucked away in a Babeldaob village, a fan of home cooking and local fishing.
How your neighborhood choice concretely influences your daily life
Living in central Koror, on Malakal, in Airai, or in a Babeldaob village doesn’t just change your rent. Each zone shapes the rhythm of your days differently, your interactions with locals, and even your professional prospects.
Access to employment and activity sectors
Expatriates present in Palau are mainly concentrated in a few key sectors: tourism and hospitality (hotels, restaurants, dive centers, boat tours), administration and international cooperation, education (private schools, international school, Palau Community College), and marine conservation (NGOs, research centers like the Palau International Coral Reef Center).
For those working in tourism, Koror and Malakal are the natural bases. Hotels and dive centers are clustered there, as are travel agencies and tour operators to the Rock Islands, Blue Corner, Ulong Channel, or Chandelier Cave. Whether you’re a dive instructor, hotel manager, or tour guide—a job that requires a Tourist Guide License, issued after a one-week training and a monthly exam—living near the docks and marinas facilitates logistics.
Expatriates working for the government, international institutions, or environmental NGOs often have their offices between Koror and Babeldaob. They face two main options: reside in Koror to benefit from its services and social life, with a daily commute to Babeldaob, or opt for quieter housing near Ngerulmud or Melekeok, closer to work but with a reduced social life.
Teachers and educational staff, whether they work in private schools, the international school, or Palau Community College, naturally gravitate around Koror, where most educational structures are concentrated. Again, housing in the center or a nearby hamlet is necessary to reduce commuting.
Schools, family, and residential choices
For expat families, the place of residence is often dictated by access to school and the quality of the internet connection, essential for both parents’ work and children’s schooling. The Palauan education system is largely inspired by the American model, with instruction in English. In Koror, there is at least one international school and several private or religious institutions like Palau Mission Academy, located in Ngerikiil (Airai state but close to Koror), with dorms, a cafeteria, and sports activities (basketball, volleyball, cross-country).
The cost in dollars for a year of international primary school, illustrating the high level of local tuition fees.
In this context, hamlets like Ngerbeched, certain parts of Airai, or peripheral areas of Koror become attractive: more space, a calmer environment, slightly more contained rents, while remaining within driving distance of schools.
Safety, health, and infrastructure: Koror’s advantage
In terms of safety, the entire archipelago enjoys a relatively low crime level. The crimes observed are mostly opportunistic thefts and burglaries, whether of unattended luggage or forgotten items. Violence is rare. The perceived risk by expatriates is therefore moderate, regardless of the neighborhood. However, the capacity to respond in case of a problem varies greatly depending on location.
Access to medical care varies considerably by island. Koror has the main hospital, equipped with a hyperbaric chamber for diving accidents. However, on Babeldaob and especially on remote islands like Peleliu, care is limited to small dispensaries with scarce medicines, and evacuations can be difficult. For expatriates, especially those with children or medical history, residing near Koror is highly recommended.
The same applies to the internet. Since the connection to the submarine cable and the launch of 4G in 2019, Palau’s connectivity has taken a leap. Still, mobile plans are expensive, and network quality erodes as soon as you move away from Koror. Setting up unlimited Wi-Fi via PNCC is considered almost essential for remote workers and families, which is not always simple or cost-effective outside the most populated areas.
In terms of transportation, a car is almost essential once you leave Koror. The archipelago has practically no structured public transportation, taxis are few and sometimes expensive if you don’t set the price upfront. The roads in Koror and the Compact Road on Babeldaob are generally in good condition, but many secondary roads remain unpaved and become tricky during the rainy season. Buying or renting a car (starting at $35 per day, or $600 for a used vehicle imported from Japan, provided it’s checked by a mechanic) is part of daily life for most residents outside Koror’s center.
Comparing Palau with other expat destinations: a niche choice
The appeal of certain neighborhoods for expatriates is only truly understood by putting Palau in perspective with other island destinations. A comparison between Koror and the Indonesian city of Labuan Bajo, another diving hub, is particularly telling.
For a “digital nomad”, Koror comes out as 60.8% more expensive than Labuan Bajo, with an estimated monthly cost of $3,040 compared to $1,890 for the Indonesian city. The average daily cost follows the same logic: $101 per day in Koror, versus $63 in Labuan Bajo. A one-bedroom apartment in Koror (about $650 in the comparison) costs 160% more than its equivalent in Labuan Bajo ($250). Even a cup of coffee illustrates this gap, with a price 133% higher in Koror ($3.50 vs. $1.50).
Analysis of each destination’s strengths for remote workers, based on cost of living, connectivity, safety, and environment.
Labuan Bajo is rated 16% more attractive, primarily due to a lower cost of living.
Koror benefits from an internet connection on average 25% faster.
Koror has a higher safety score and a very welcoming society.
In Koror, English is widely spoken, facilitating integration.
This differential partly explains why expatriates present in Palau are few in number and often linked to structured jobs (high-end tourism, cooperation, NGOs, teaching), rather than a massive wave of freelancers seeking low costs. The sought-after neighborhoods in Palau are not prized for their trendy cafes or coworking spaces, but because they offer, in an expensive and sparsely populated country, a minimum of comfort, connectivity, and social connection.
Investing or renting: what “sought-after neighborhood” means for an owner
For a few more capitalized expatriate profiles, the question is not limited to renting an apartment but to investing in real estate – whether to live there, rent to other foreigners, or run a tourism business.
In Palau, the situation is different from many countries: foreigners cannot own land in full ownership. They can sign long-term leases, up to 50 years, extendable for an additional 49 years (i.e., 99 years total), and own the buildings and improvements constructed on these plots. Any establishment therefore implies a close relationship with Palauan partners, especially since certain activities—retail trade, transportation, travel agencies, commercial fishing—are reserved for citizens or subject to partnership obligations.
The maximum gross rental yield for some tourism operations in Palau, subject to good management.
A strong difference is observed between investments in the city center and in the periphery. The displayed “price / rent” ratios thus show significantly higher yields for areas outside the center, with an estimated gross yield of 17.56% versus 2.40% in the urban core according to a data synthesis. This notably reflects the fact that some properties on the periphery are still relatively cheap to buy, even as rental demand increases.
An overview of average gross yields by type of property, across the national territory.
The average gross yield for an apartment is generally between 3% and 5%.
The average gross yield for a house is often slightly lower, around 2.5% to 4%.
Parking spaces or garages can offer attractive yields, often between 4% and 6%.
Commercial spaces present variable yields, generally between 4% and 8%, depending on location and business sector.
| Property Type | Estimated Gross Rental Yield |
|---|---|
| 1-bedroom Apartment | 3.87 % |
| 2-bedroom Apartment | 8.55 % |
| 3-bedroom Apartment | 7.06 % |
| 4-bedroom+ Apartment | 2.41 % |
| Overall Residential | 5 – 7 % |
| Tourist Properties (Koror) | 5 – 7 % |
| Tourism Operations (Properties) | 8 – 12 % |
| Downtown Commercial | 6 – 9 % |
| Outer Island Properties | 4 – 8 % |
This table should be handled with caution: data remain limited, the market is narrow, and price trends are closely tied to the tourism situation. Periods of growth (2010–2019) saw annual increases of 3 to 6%, while 2020–2022 experienced stagnation or even a slight decline, before a more moderate recovery (2–3% annually) since 2023.
For an expatriate primarily seeking to live on-site rather than speculate, these figures are interesting mainly insofar as they explain the scarcity of affordable housing in the most sought-after sectors like central Koror or Malakal: many properties are geared towards tourism, where nightly profitability can exceed $250 in high season, which incentivizes owners to prioritize short-term rentals.
Integration, network, and solitude: what the neighborhoods don’t say
The map of neighborhoods favored by expatriates in Palau is ultimately quite simple to trace: Koror for the density of services and networks, Malakal for sea-oriented life, a few peripheral residential hamlets for families, Babeldaob for those seeking peace or working in institutions.
The expatriate community in Palau is small and informal. It organizes mainly via social networks (groups like “Palau Expats” or “Palau 4 Palauans”) and common activities such as weekly volleyball at Long Island Park, boat trips to the Rock Islands, or events organized by coworking spaces and NGOs. There are no official clubs or formal associations.
This social fabric quite naturally concentrates around Koror and its immediate surroundings. The bars of Malakal, the cafes of Koror, cultural events in museums and night markets become landmarks as much as places to relax. Settling in a neighborhood too remote, without a vehicle or strong local professional ties, increases the risk of solitude – a theme that regularly comes up in expatriate testimonies.
Palauan society is matrilineal and structured around councils of chiefs and women, with strong respect for elders and the environment. Practices like the “bul” (temporary taboo on activities like fishing) aim to protect resources. For an expatriate, attitude and respect for these codes, whether in Koror, Airai, or a village, are more important than the precise place of residence.
In summary: which neighborhood for which expatriate profile in Palau?
One can get lost in numbers, yields, and international comparisons. But, in daily life, the choice of neighborhood in Palau mainly comes down to a trade-off between three parameters: proximity to services, immersion in nature, and budget.
A remote worker or digital nomad coming for a few months will almost always choose Koror or Malakal, possibly a coliving with integrated coworking, to benefit from an acceptable internet connection, easy access to cafes, restaurants and dive shops, and a minimally active social life. The extra rent compared to more rural areas is offset by lower transportation costs and faster integration.
A family with children, prioritizing quality of life, schools, and space, will turn towards residential hamlets near Koror or certain areas of Airai. These sectors, close to schools and the airport while removed from tourist flows, offer the sought-after calm. The choice will typically be a house with a yard rather than a downtown apartment, accepting a slightly longer car commute for these advantages.
An expert or researcher engaged in conservation projects, a development worker, or an international civil servant might prefer a house on Babeldaob, near Ngerulmud or the natural areas they frequent, provided they have a vehicle and accept a more isolated life, where restaurant outings and evenings among expatriates will be few and far between.
Regardless of the choice, one constant remains: in Palau, a neighborhood favored by expatriates is defined not by the number of trendy bars, nor by the density of shopping malls, but by the rare combination, in an archipelago of fewer than 20,000 inhabitants, of decent housing, a viable internet connection, a minimum of health and education services, and direct access to what brought one here rather than elsewhere: turquoise lagoons, preserved reefs, a proud culture, and a way of life that could be summed up in two Palauan words often heard in Koror as in the villages of Babeldaob: “Alii, welcome.”
Expatriate in Palau
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
