Rents have grown considerably for prime property since last year, according to data from global property firm Knight Frank.
Reflecting a fuller reopening of economic activities and a widespread return to pre-pandemic norms for workers, Knight Frank‘s research also showed significant rent rises in prime property in Toronto (17.2%), Singapore (10.8%) and Sydney (7.2%).
Knight Frank’s research showed that the average rise in prime property rent was 11.9% – the highest annual rate rise since 2010. The bounce back for New York was significant, with the city seeing a 20.1% fall in prime rents during the pandemic.
The new index tracks rises in prime property rents across ten cities globally from Knight Frank’s research network, with nominal rent rises measured in local currencies. All cities tracked saw increases, with Geneva having the smallest rise in the prime rental market at 1.1%.
Another key finding was the fall in prime property listings in the central London rental market over the same period, which saw a steep fall of 72.2% - confirming that stock is dwindling as workers and corporate tenants have returned to the prime end of the market.
Kate Everett-Allen, partner and head of International Residential Research at Knight Frank, told Spear's that "the jump in prime rents globally is further evidence of the resurgent appeal of urban living. Workers are returning to their offices; corporate tenants are increasing in number and international students are gaining the confidence to travel overseas once more.
"The surge in rents reflects a reversal of the large falls witnessed in 2020, which helped attract tenants back to the city, motivated by the large discounts available. But with rents now reaching pre-pandemic levels in a number of key cities, economic growth stuttering and the labour market weakening, Knight Frank expects prime rental growth to cool rapidly over the remainder of 2022."
Knight Frank also measured prime property rent increases in each city in the first three months of 2022 alone. New York again showed the greatest rise over the smaller time frame, with a 10.6% jump in rents, while all other cities saw modest increases apart from Hong Kong, which saw a slight fall in prime rents of 1.1% over the period.
However, Hong Kong did see a 3.9% increase in prime property rents over the wider time frame, with the recent fall reflecting a fresh wave of Covid infections and closures limiting the market to domestic tenants.
In most of these locations, key to the rises has been dwindling supplies of homes in the market and lifting of Covid restrictions. According to Knight Frank, the rises also show that many workers have been reconsidering where they want to live, with the rise in ‘digital nomadism’ and welcome visas creating a more transitory workforce in many cities.
But with prime property rents now reaching pre-pandemic levels, as well as economic growth stuttering and the labour market weakening, the estate agent expects prime rental growth to cool rapidly over the remainder of 2022.
This article originally appeared at Spear's.