Prime residential rents have continued to rise, though their rates have slowed, international property consultant Knight Frank has found. Across ten cities worldwide, luxury rents increased by 10.2 percent on average in the 12 months to Q3 2022. This is a drop from a high of 11.9 percent in Q1 2022.
New York leads the rankings for the third consecutive quarter for prime residential rents. Annual growth had dipped from a high of 39 percent last quarter to 31 percent. However limited stock and continuing demand has kept rents elevated. The number of properties available for rent across Manhattan has dropped 5 percent over the quarter but is 65 percent lower than September 2020.
Singapore is second with a 23 percent rise in luxury rents over the same 12 months. The opening of its borders combined with the introduction of new visas to attract top talents from across the globe has created a rise in demand. Rules announced in September have meant that anyone looking to sell a private home and buy a non-subsidised Housing and Development Board (HDB) resale flat will now need to wait 15 months. This change in policy is contributing to high demand for rent as sellers opt to rent out in the interim.
London rounds off the top three. The capital recorded a 19 percent rise in the same period with annual rental growth down from 27 percent last quarter. This highlights the slowdown from the summer rental peak. But demand is still strong. Knight Frank’s data shows the number of new prospective tenants was 60 percent above the five-year average, excluding 2020, in October while new listings have dropped by around a third.
Two cities that saw prime rents decline year-on-year were Hong Kong (down 5 percent) and Auckland (down 2 percent). Demand in the former was largely driven by locals in the third quarter due to travel constraints. But with restrictions on new arrivals now being lifted, demand from expats is expected to rise. In Auckland, a strong supply is softening the effect on luxury rents. Following nine base rate hikes, the average mortgage rate is currently around 6 percent, prompting a few vendors to temporarily downsize and rent out rather than sell.