Knight Frank’s Prime Global Rental Index tracks the growth of luxury residential rents across key world cities. The index looks exclusively at prime property, which Knight Frank defines as “the most desirable and expensive property in a given location, generally defined as the top 5% of each market by value.”
Across the ten cities surveyed, luxury rents rose by an average of 10.2% in the 12 months to Q3 2022. While prices slowed from a high of 11.9% in Q1 2022, the global prime rental market remains strong with impressive double-digit growth.
Which global cities are leading the way?
New York came top of the list with a 31% increase in rental values. The Big Apple was followed by Singapore, which saw a 23% rise in luxury rents in Q3 2022.
London came in at third place on The Knight Frank Index. Though rental growth experienced a substantial slowdown from the previous quarter, prime rents remained 19% higher than in Q3 2021.
In October, the number of new prospective tenants in London was recorded as 60% above the five-year average (excluding 2020). New listings were also down by about a third.
With high demand and a shortage of available rental properties, we can expect rental values in London to remain on the rise. Knight Frank forecasts a 6% rental growth in prime London for 2023.
New York and London also saw the most dramatic recovery in prime rental growth since the lows of the pandemic. Rental values recovered 50% in New York, whilst London prime rents saw around a 40% increase.
Out of the ten cities surveyed, Auckland and Hong Kong saw a negative annual change in rental prices of -2.2% and -5% respectively.
Auckland is experiencing a strong supply of rental properties, and Hong Kong’s rental market is still feeling the effects of the city’s lingering travel restrictions.
The other 8 cities in the index registered a positive price change. Toronto joined New York, Singapore, and London with a double-digit increase, whilst Sydney, Geneva, Monaco, and Tokyo saw growth ranging from 2-9%.
Is a slowdown in prime rents cause for concern?
Whilst global prime rents did slow slightly from the second to the third quarter, prices remain considerably higher than a year ago and prime rental properties remain a lucrative investment venture.
For U.S. investors, London represents a particularly attractive market right now; not only has it proved resilient in recent years, but UK property also presents an opportunity to capitalise on the strong dollar.
Contact us today to discuss global investment opportunities.