Hong Kong, London and Singapore see weakest growth in prime rentsPrime residential rental growth in emerging markets such as Nairobi and Dubai continues to outpace that of the traditional financial centres of London and Hong Kong.
Nairobi leads our annual rankings for the fourth consecutive quarter. Prime rents in the Kenyan capital increased by almost 26% in the year to March, but there are signs the market is cooling with growth of only 2.1% recorded in the first three months of 2014.
Some of the world’s top financial centres – Singapore, London and Hong Kong – are positioned at the bottom of the rankings with annual falls of -0.3%, -2.0% and -6.3% respectively.
However, we expect prime rental growth in these key cities to strengthen over the remainder of 2014.
In London, the rental recovery looks to be taking hold as price growth starts to slow. New registrations are up 17% year-on-year and tenant demand is coming from a diverse set of industries – oil and gas, mining and IT.
In Hong Kong, although there has been a relaxation of the Double Stamp Duty rule, a number of stringent cooling measures remain in place. With foreign buyers facing purchase costs of 25% of the sales price, the luxury rental market is attracting those deterred from buying, which should help support future rental growth.
The withdrawal of stimulus, along with the expected rise in interest rates in influential economies such as the US and the UK, is likely to boost rental demand as mortgage costs rise over time.