Knight Frank’s Prime Global Rental Index, which tracks the change in luxury residential rents across 17 cities globally, recorded annual growth of 0.5% in the year to June 2016. The number of cities where rental growth has increased rose from seven in the previous quarter to ten this quarter.
Moscow holds the top spot, with prime rents rising by 11.1% year-onyear. Sizable infrastructure investments in the city, combined with a marked slowdown in the contraction of the national economy and substantial gains in oil price over the last quarter have underpinned rental growth.
Nairobi continues to be the weakest performing market with prime rents falling by 9.2% annually. Since Q3 2011 Nairobi has recorded annual prime rental growth of 9.7% on average, the market is now looking to rebalance.
The slowdown in the prime central London rental market continues with rents falling by 3.0% in the 12 months to June 2016 with higher stock levels and uncertainty in financial markets contributing to the fall. The data for London largely covers the period leading up to the UK’s EU referendum; our latest Prime Central London Index can be found here.
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 with prime rents rising by 4.4% in the year to Q2 2016.
Over the same time period, 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.
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.
*The Knight Frank Prime Global Rental Index is an important resource for investors and developers looking to monitor and compare the performance of prime residential rents across key global cities. Prime property corresponds to the top 5% of the housing market in each city. The change in prime residential rents is measured in local currency. The index is compiled on a quarterly basis using data from Knight Frank’s network of global offices and research teams
DISCLAIMER: The data above represents the findings of Knight Frank and is not in any form and endorsement or recommendation by iProperty.com. Readers are encouraged to seek independent advice prior to making any investments.
This article was first published in the iProperty.com Malaysia November 2016 Magazine. Get your copy from selected news stands or view the magazine online for free at www.iproperty.com.my/magazine. Better yet, order a discounted subscription by putting in your details in the form below!