Rents on luxury homes cool in first quarter as Singapore drags market while Sydney, Auckland and London log best gains
- Declines in Singapore, Hong Kong and Toronto kept global rental growth rate below long-term trend average, according to a Knight Frank report
- Sydney, Auckland and London were the hottest markets, while Berlin, Miami, Monaco, Los Angeles and Tokyo all gained by 4.5 per cent or more
Rents climbed at an annual rate of 3.7 per cent in the first quarter, according to the property consultancy’s Prime Global Rental Index, which tracks prices in 15 cities. That was the smallest increase since the second quarter of 2021, and no where near the 12.4 per cent recorded in the first three months of 2022.
“After a period of substantial rental growth, it’s not surprising to see policymakers exploring solutions to high rents, as evidenced by the discussions around rent caps in London,” said Liam Bailey, its global head of research based in London. “The rebalancing between supply and demand will be crucial in shaping the rental landscape.”
Last quarter’s gain meant rents on luxury homes have fallen below the index’s long-term trend average growth of 3.8 per cent, Knight Frank said in the report, following a rapid post-pandemic rebound as curbs on cross-border travels were scrapped. Even so, demand is expected to strengthen later this year, it added.
The latest report showed 12 of the 15 cities registering positive rent growth, led by Sydney which gained 17.3 per cent. Auckland and London made up the top three markets, both advancing by 5.6 per cent. Rents in Berlin, Miami, Monaco, Los Angeles and Tokyo all gained by 4.5 per cent or more.
Singapore logged the worst outcome as rent fell by 2.9 per cent, while those in Hong Kong and Toronto retreated by less than 1 per cent.
“Demand has been matched in some price brackets by a higher supply of accommodation,” Bailey said. Despite the recent slowdown, “we expect rental growth to resume its upward trajectory later in the year, driven by sustained demand in key global cities.”
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Hongkongers react after 2024-25 budget scraps measures to cool property market
The number of luxury home deals on The Peak and the Southern district jumped 1.4 times in the first quarter from a year earlier, according to data published by Midland Realty. Turnover increased 13 times to HK$3.4 billion (US$434.7 million).
Hong Kong’s Top Talent Pass Scheme, introduced in December 2022, has so far attracted almost 2,000 professionals with at least HK$10 million (US$1.3 million) in annual income.
“Renting becomes a preferred choice upon their arrival, and this trend persists even in the face of a high interest-rate environment,” he said. Hong Kong’s prime rental rates could increase by another 3 to 5 per cent for the rest of the year, he said.
