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July 15, 2022updated 14 Jul 2022 2:41pm

Prime property rents have surged in New York and London

New York and London saw the largest rises in prime property rents out of the ten cities analysed in Knight Frank’s first Prime Global Rental Index.

By Rory Sachs

Rents have grown considerably for prime property since last year, according to data from global property firm Knight Frank.

Researchers found that New York saw the greatest rise in prime property rents in the year to Q1 2022, increasing by 38.5%, while prices in London rose by 26.4% over the same period.

prime property
Prime property in New York has spiked in rental prices. (Photo by thenibblet/iStock)

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."

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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

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