Residential Real Estate News
Luxury Residential Rental Rates Have Peaked, Worldwide
According to international property broker Knight Frank, growth in prime global rental markets appears to have peaked following months of rapid gains fueled by a substantial imbalance of supply relative to demand.
Knight Frank's latest Prime Global Rental Index increased 11.3% in the year to June 2022, down from 11.9% in March 2022. The dip is small and average annual growth remains in double digits, but growth is now ebbing in some key markets.
New York comes out on top with annual growth of 39%. Prime rents in Manhattan now sit 17% above their pre-pandemic levels. London posted 27% annual growth in the year to June putting it in second place, but recent data shows this figure is starting to ebb. Singapore has leapfrogged Toronto (15.3%) this quarter to take third place with rental growth of 15.8%. April saw the city-state reopen, leading to an uptick in expatriates and returning professionals, with many opting to rent.
Knight Frank's Kate Everett-Allen says post-pandemic rental recovery will evolve over the coming months. Higher mortgage rates have the capacity to increase both demand and supply in the rental sector. Deteriorating affordability in the sales market will push some buyers to rent instead, and with fewer buyers, some sellers may become accidental landlords.
