Prime global property rents increased by 0.5% in the year to June 2016, the first indication of a recovery in this real estate sector for 12 months, the latest index data shows.
Growth was led by Moscow with prime rents rising by 11.1% on an annual basis while North America is the strongest performing world region for the third consecutive quarter, with prime rents rising by 4.4%.
Of the 17 cities tracked by the Knight Frank index, 10 saw prime rents rise in the 12 months to June 2016 but the worst performing was Nairobi with rents down by 9.2% year on year.
The second highest growth was in Tokyo where rents were up 9% year on year, then Guangzhou in China with annual growth of 4.8% followed closely by New York with growth of 4.7% and Toronto up 4.1%.
After Nairobi the next biggest slowdown was in Zurich with rents down 7.7% year on year, then Hong Kong down by 7.3% and London down 3%. The only other cities to see prime rents fall were Singapore with a drop of 2.3% and Geneva down 1.5%.
Prime property rents were static in Taipei and increased by 0.7% in Beijing and Tel Aviv, by 1.5% in Cape Town, by 1.6% in Shanghai and by 2.5% in Vienna.
The index confirms the slowdown in the prime central London rental market with rents falling by 3% in the 12 months to June 2016 with higher stock levels and uncertainty in financial markets contributing to the fall. The index report points out that data for London largely covers the period leading up to the UK’s European Union referendum.
It also explains that the gap between the top and bottom ranking cities has risen considerably. The strongest performing city Moscow and the weakest performing city Nairobi are separated by 20.3%. A year earlier the comparable figure was 15.1%.
North America, for the third consecutive quarter, registered the strongest increase while Africa recorded the weakest performance with prime rents falling by 3.9% on average.
‘Whilst uncertainty caused by Brexit and the US presidential election still lingers, we are starting to see a more positive global economic landscape develop,’ said Taimur Khan, Knight Frank senior research analyst.
‘Sustained and positive economic data from the US, growth in emerging markets led by easier access to credit markets and increased demand from China for commodities suggest a positive outlook for the remainder of 2016. For prime rental markets these factors are likely to stimulate demand from corporate tenants,’ he added.
