Global prime rents continue to rise but rate of growth slowing: Report
Dec 28, 2022
London (UK), December 28 : Prime rents continue to rise in London but the rate of growth is slowing, according to Knight Frank. Across 10 global cities luxury rents increased 10.2 per cent on average in the 12 months to the third quarter (Q3) of 2022, down from a high of 11.9 per cent in the first quarter (Q1) of 2022, according to Knight Frank in a report. These cities are New York, London, Singapore, Toronto, Sydney, Tokyo, Geneva, Monaco, Hong Kong and Auckland.
New York led the rankings for the third consecutive quarter. Annual growth may have dipped from a high of 39 per cent last quarter to 31 per cent, but limited stock and continued demand is keeping rents elevated, according to Knight Frank.
The number of properties for rent across Manhattan is down 5 per cent over the quarter but 65 per cent lower compared to pandemic times in September 2020, according to StreetEasy.
Singapore sits in second place, registering a 23 per cent rise in luxury rents over the last 12 months. The opening of borders, along with the introduction of new visas to attract top talent from around the world, has generated an uptick in demand.
London completes the top three. Although the UK capital recorded a 19 per cent rise in the year to Q3 2022, annual rental growth is down from 27 per cent last quarter, reflecting the slowdown from the summer rental peak.
But demand remains strong. Knight Frank data shows the number of new prospective tenants was 60 per cent above the five-year average (excluding 2020) in October, while new listings were down by about a third.
Two cities saw prime rents decline year-on-year, Hong Kong saw a 5 per cent drop while Auckland witnessed 2 per cent dip. Demand in Hong Kong was largely locally-driven in the third quarter due to travel constraints, but with restrictions on new arrivals now lifted, demand may start to increase from expats.
In Auckland, strong supply is having a softening effect on luxury rents. Following nine base rate hikes, the average mortgage rate is currently around 6 per cent, prompting some vendors to downsize temporarily and rent rather than sell their property.
In Singapore, new rules announced in September mean those looking to sell their private home and purchase a non-subsidised Housing and Development Board (HDB) resale flat now have to wait 15 months, this policy shift is adding to rental demand as sellers opt to rent in the interim.
