Prime global rents continue to fall globally

Posted On Thursday, 30 June 2016 14:20 Published by
Rate this item
(0 votes)

Knight Frank’s Prime Global Rental Index, which tracks the change in luxury residential rents across 17 cities globally, fell for a third consecutive quarter with rents falling on average by 0.5% in the year to March 2016.

Knight Frank Logo

Of the 17 cities tracked by the index, 11 have recorded flat or falling prime rents over the last 12 months.

Toronto leads the rankings with prime rents rising by 8.9%. Strong demand for prime rental properties, combined with a low vacancy rate for condominium apartments, has driven prime rents higher. This is despite completions nearing historic highs, which would usually mean an increase in rental supply and downward pressure on prime rents.

Prime rents in Nairobi fell by 7.9% in the 12 months to March. Demand for prime rental properties has traditionally been from expats. Rents have trended lower as we are seeing weakened demand from this segment of the market due to multinational firms downsizing as a result of adverse economic circumstances driven by low commodity prices.

In London we have seen prime rental growth slow to -1% in the year to March 2016, the lowest annual rate since May 2014. However, the total rental yield which 

is a combination of capital growth and rental yield was 3.7% in the year to March, outperforming benchmark hedge fund and stock market indices.

Luxury rental and sales markets tend  to move in opposite directions (figure 4). Luxury sales markets have been subject  to increased regulation (New York) and  a changing tax landscape (UK). Prior  to the implementation of some of these regulations, volumes in prime sales markets have increased. This has led  to an increased level of supply of prime rentals and therefore prices have fallen, in the coming year we expect the prime global rental index to rebound as these factors are absorbed. 

North America remains the best performing region with average prime rents increasing by 3.3% in the year to March. Africa has displaced Europe as weakest-performing region with rents falling on average by 3.2% annually. 

Uncertainty in global markets,  partly as a result of Brexit, the US presidential election and the timing of  the next US rate hike has led to investment decisions on a corporate  level being put on hold as firms adopt  a wait and see attitude. 

Last modified on Thursday, 30 June 2016 14:33

Most Popular

Residential sectional title sales again on the rise

May 27, 2021
Andrew_Golding_Golding_PropertyGroup
Over the past 15 years, the sectional title market in South Africa has become entrenched…

Ongoing property market uncertainty makes the right finance partner key to extracting value

May 26, 2021
Claire Denny
Results from the listed property sector in 2020 showed property values reducing by an…

Pick n Pay and Fortress co-invest in a super distribution centre development

May 26, 2021
Fortress_Pick_n_Pay
Fortress REIT announced that their biggest logistics development to date was signed with…

Exemplar REITail declares final dividend of 49.07 cps and announces 100% distribution

May 25, 2021
Mall of Thembisa
Rural and township retail specialists, Exemplar REITail, have declared a final dividend…

East Rand Mall will soon deliver the first phase of its major taxi rank upgrade

May 26, 2021
Phase 1 upgrade to the taxi rank at EastRand Mall
The first-phase upgrade of East Rand Mall taxi rank in the retail heart of Boksburg,…

Please publish modules in offcanvas position.