According to Knight Frank's Prime Global Rental Index, the average rental growth in the ten cities under consideration has escalated, exhibiting an upward trend that is three and a half times their long-run trend rate. Prime rents have surged to a level 17.9% higher than their pre-pandemic peak in Q3 2019.
Despite ongoing debates surrounding work-from-home arrangements and the challenges in the office sector in key cities, the growth in the index confirms the underlying strength of demand for city living and the resilience of accommodation requirements from workers in proximity to Central Business Districts (CBDs).
Sydney is the top-ranked city on Prime Global Rental Index, whose annual growth went from 13.1% reported in Q2 2023 to 18.3% in Q3 2023. Singapore and New York experienced a quarterly dip in rent, however rental trends for both the markets remain strong annually. The rise in annual growth had fair share of contribution from Auckland which has shown a jump from 7.2% in Q2 to 13.1% in Q3. Annual rental growth in Prime Central London stands at 11.2%, indicating a cooling trend in demand and supply re-balance.
Liam Bailey, Knight Frank’s global head of research, said, “While prime global rents continue to climb, with the Prime Global Rental Index strengthening to 7.9% year-on-year in September, slower growth in markets like New York and Singapore points to the likely direction of travel for big city markets - where, despite strong demand and weak supply, we are approaching affordability limits.”