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Housing


19 July 2017

GLOBAL: Cape Town leads luxury residential rental growth

According to Knight Frank, the independent global property consultancy, the Prime Global Rental Index, which tracks the change in luxury residential rents across 17 cities around the world, recorded annual growth of 0.5% in the year to March 2017. Yet the general trend has been for steady, rather than spectacular growth.

The number of cities where prime rents have increased on an annual basis rose from 6 in Q1 2016 to 12 in Q1 2017. Cape Town leads the rankings with rents rising by 5.9% in the year to Q1 2017. Growth has been underpinned by strong migration into Cape Town with potential buyers choosing to rent before committing to purchasing.

Prime rents in Nairobi fell by 6.2% in the 12 months to March 2017. Budget cuts by international firms have hampered demand from expats for prime rental properties. Additionally, increased supply has helped to push prime rents lower. 

Prime rents in London continue to bottom out with the annual rate of falls slowing to -4.9% to March 2017. Uncertainty in the sales market following a series of tax hikes has led to an increased supply of properties for rent. However, this trend is starting to ease as the sales market stabilises. 

Some of the world’s top financial centres have shown divergence in terms of the performance of prime rents. Annual rental values fell in New York (1.2%) and Singapore (2.3%) whereas Zurich and Hong Kong recorded a rise year-on-year of 5.1% and 0.6% respectively over the year to March 2017.

Global economic sentiment remains cautiously upbeat. The latest indicators show low unemployment in the US, positive economic growth in every European country (the first time since the global financial crisis) and the growth rate in Asia remains robust. This may spur additional business investment, increased relocation budgets and ultimately an increase in demand for rental accommodation around the world.

For more information view the Knight Frank’s Prime Global Rental Index - Q1 2017 report here

 

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