Global prime rents recover from COVID-19

Rents on prime properties in ten global cities have bounced back strongly after the sharp falls seen during the height of the pandemic, according to a new report from Knight Frank

David Sapsted

29 June 2022

The estate agent's 'Prime Global Rental Index' found that, in the year to the end of March, New York and London led the resurgence with rents increasing 38.5% and 26.4% respectively.

Toronto (17.2%) and Singapore (10.8%) also registered double-digit, year-on-year rental rises.

"This first set of results confirms the extent to which top tier cities are seeing demand return and stocks dwindle as workers, along with international students and corporate tenants, return to the prime end of the market," said Kate Everett-Allen, head of international residential research at Knight Frank.

"The surge in rents reflects a reversal of large falls in 2020, which helped attract tenants back to the city. But with rents now reaching pre-pandemic levels, economic growth stuttering and the labour market weakening, we expect prime rental growth to cool rapidly over the remainder of 2022."

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Other cities rounding out the top ten in prime rental increases over the year were Sydney (7.2%), Auckland (5.9%), Tokyo (5.4%), Hong Kong (3.9%), Monaco (2.7%) and Geneva (1.1%).

However, Hong Kong stood out as the only one of the ten to see an actual, monthly decrease over the first quarter of this year. Prime rents fell 1.1% over the first three months compared to Q4 of 2021.

Continuing Covid lockdowns in Hong Kong, exacerbated by concerns over strict, Beijing-imposed security laws, had resulted in an exodus of expat workers, the report found.

Elsewhere, Knight Frank calculated that, comparing the final quarter of last year with the first quarter of this year, New York led gains with a 10.6% increase, followed by 3.8% in Toronto and Singapore, and 3.6% in London.

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While the company now sees the rate of increase to slow considerably, it pointed out that Toronto could prove an exception.

"Here, rental listings are down 23% in the year to March 2022 and Canada’s ban on foreign buyers may push demand higher as those relocating from overseas are forced to rent, not buy," said Knight Frank.

"The inverse relationship between residential sales and rental markets means the performance of each city’s sales markets in the coming months will be a key factor to monitor."