Prime global residential rents climbed 0.6 percent in 2014, or its slowest annual increase since 2009, according to a Knight Frank index.
Tokyo topped the annual rankings with prime rents rising 11.1 percent last year. Of all the global regions, the Middle East witnessed the strongest year-on-year hike in prime rents at 6.5 percent.
But Moscow saw prime rents plunge 16 percent due to the weak rouble.
While the drop in Moscow’s rents dragged the global index down, four other cities: Singapore, Geneva, Beijing and Vienna also saw prime rents fall year-on-year.
“The weak index results underline the global economy’s fragility in 2014 but hides the fact that 12 of the 17 cities we cover saw luxury residential rents increase or remain static in 2014,” said Kate Everett-Allen, Knight Frank residential research partner.
Tokyo benefitted from Japan’s rebound in 2014, with the economy expected to rise 1.3 percent in 2015 and 2.0 percent next year, noted the report. Central wards like Minato and Chiyoda are witnessing a rise in tenant demand from expats and strong population growth.
Meanwhile, the potential US interest rate hike and ongoing cooling measures in Hong Kong suggests that more landlords in Hong Kong chose to rent their property last year instead of selling, adding to rental supply and suppressing rental growth.
In Dubai, much of the 8.1 percent increase in prime rents was recorded in the first half of 2014.
In prime central London, although monthly growth slowed to zero by end-2014, the annual increase in rental values hit 3.3 percent, or the highest rate in three years.
“Demand and activity in the prime residential rental market is strongly linked to business activity and employment levels. Events in Europe will be critical to the overall index’s performance in 2015 with significant areas of concern still being addressed in the region’s economy,” shared Everett-Allen.
To date, business activity within the Eurozone in close to a four-year high while deflationary pressures have partly eased due to higher wages indicating a more positive outlook for this year, she explained.
Romesh Navaratnarajah, Singapore Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg
