Global Luxury Rental Market Is Slowing Down After Witnessing A Historic Boom: Report
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A recent report from Knight Frank, a global real estate consultancy firm, has revealed that the luxury rentals market boom has come to an end in the fourth quarter of 2023. The firm’s annual Prime Global Rental Index showed that rent increment on luxury properties slowed down across the top global markets.
Liam Bailey, the global head of research at Knight Frank added that the prime global rental markets had experienced a boom in the recent past but now, the rents which were running four times their long-term rate in 2022, are running just double their long-term rates.
Out of the 10 cities covered by the index, five of them saw a cooldown in luxury rent prices while the overall luxury rental values rose by an average of 5.2% in the last quarter of 2023.
Q4 23 Global Rent Index from Knight Frank confirms the worldwide trend for falling rents growth.
— Moving Home with Charlie (@moving_charlie) February 15, 2024
The top 20 cities: Year on Year, all still positive. 6m change, mixed, 3 month change mostly negative.
So is rent growth accelerating or falling? The guffers will say "Top 10… pic.twitter.com/o6HNKNNLyX
Rent Overview of The Top Cities
As per the report, Sydney led the list of luxury rent increases with 18.1% growth annually and 4% quarterly.
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The reason behind it is probably the new construction which has also caused an ongoing housing shortage. A surge in demand driven has also contributed to the issue.
Things looked different for renters in New York as the prime rents fell each month during the last quarter of 2023. The city posted -0.3% annual growth and -2.5% quarterly growth in luxury rent values.
![The Statue of Liberty stands in the foreground as Lower Manhattan | Getty Images | Photo by Drew Angerer](http://dmjzpe3a34ghz.cloudfront.net/6fd56a36-bd7e-44fc-aa85-9aefce450ff4.jpg)
However, according to Douglas Elliman the median rents in one of the U.S’ prime markets remained at $4,195, indicating that affordability is only slowly improving.
Further, according to a Mordor Intelligence report, the luxury residential real estate market in the US is expected to register a CAGR of approximately 3% in the 2024 to 2029 period.
Across the pond in London, demand is declining due to the squeeze on tenants’ finances. Further a slower labor market, easing earnings growth, and increased affordability pressures have limited the growth in rent values.
![A scenic view of the Houses of Parliament and Big Ben in London | Getty Images | Photo by Bruce Bennett](http://dmjzpe3a34ghz.cloudfront.net/3fc0852f-a729-4beb-b9af-2fa85c7d8465.jpg)
As per the report, the annual rental growth in Prime Central London stood at 7.9%, which is the lowest in two years, showing a cooling trend as demand and supply rebalance in the market.
In Singapore, the rental market showed signs of softening after a two-year rally.
The annual growth slowed down to 5% and the quarterly growth fell to 1.6% as per the new report. This may be caused by an increase in new-build supply in favor of tenants.
"No Indians, no mainland Chinese" http://t.co/Z5ogfRdYE0 The brazen prejudice afflicting Singapore's rental market pic.twitter.com/Pch5eosd3C
— BBC News (World) (@BBCWorld) May 2, 2014
Also, the recent changes in official occupancy rules, which will allow more sharing of accommodation, are likely to increase availability in 2024.
Further, Hong Kong’s prime residential rental market saw limited annual growth as well. The annual growth stood at a mere 0.9%, and the quarterly growth stood at 2% indicating a slowdown.
A rental market for public flats
— YueChim Richard Wong (@yuechim) December 3, 2020
“Public Flat Rental Market and Increasing Housing Supply”, Hong Kong Economic Journal
Full article: https://t.co/Vq2ocd51Yb pic.twitter.com/dxDfDiRZIO
The recent decline was influenced by seasonality, as the winter market typically marks a quiet period for new rentals. It also reflected a weak period in financial markets, which has impacted hiring and, subsequently, demand for luxury rental properties. Also, the increase in new construction added to the slowdown in the growth of luxury rental values.