Prime rents are surging the most in Sydney, Australia, with a 13.9% increase in the past year, Knight Frank’s Prime Global Rental Index has revealed.
The market in Sydney has been boosted by strong immigration in the past two years, while the delivery of new builds has yet to offset this demand.
In general however the prime markets have been calm in the past year, as rents have increased by 3.5% across 15 major cities.
Liam Bailey, Knight Frank’s global head of research, said: “The recent slowing in prime rental growth suggests an end to the substantial upward repricing of key city markets seen over recent years.
“Even the luxury sector is subject to affordability constraints, and in most cities, rental growth has moved closer to long-term trend levels.
“However, with the majority of markets still experiencing pressure from relatively strong demand set against limited supply – exacerbated by Covid-era development disruptions – upward pressure on rents is likely to support above-trend growth in the medium term.”
Other markets
The second fiercest market is Tokyo, Japan, (11.0%), followed by Berlin, Germany (6.9%).
Fellow German city Frankfurt has seen the fastest increase in the past three months, where rents increased by 3.1%.
At the other end of the spectrum, annual rental growth has turned negative in Singapore (-4.8%), Toronto (-1.9%) and Hong Kong (-0.8%). Knight Frank said all three markets are under pressure due to relatively healthy new supply volumes.
In terms of long-term growth, prime rents are 27% above their Q1 2021 level on average. Since then the biggest growth has occurred in New York (57.1%) and London (56.5%).
