ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / ECONOMY & WORK

Global Luxury Rental Market Is Slowing Down After Witnessing A Historic Boom: Report

Out of the 10 cities reviewed by Knight Frank, five of them saw a cooldown in luxury rent prices
PUBLISHED FEB 16, 2024
A view of the beach from a beachfront deluxe bungalow | Getty Images | Photo by Paula Bronstein
A view of the beach from a beachfront deluxe bungalow | Getty Images | Photo by Paula Bronstein

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.



 

As per the report, Sydney led the list of luxury rent increases with 18.1% growth annually and 4% quarterly.

 A general view of the Sydney Opera House | Getty Images | Photo by Ryan Pierse
A general view of the Sydney Opera House | Getty Images | Photo by Ryan Pierse

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
The Statue of Liberty stands in the foreground as Lower Manhattan | Getty Images | Photo by Drew Angerer

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
A scenic view of the Houses of Parliament and Big Ben in London | Getty Images | Photo by Bruce Bennett

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.



 

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.



 

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.

MORE ON MARKET REALIST
The greeting caught Steve Harvey by surprise, and he took several seconds to regain his composure.
2 hours ago
The nascent nature of the company prevented the sharks from investing in it.
1 day ago
Harvey seemed quite annoyed after the guest revealed her surprise and rightfully so.
2 days ago
Both Rick and his son Corey had a lot of luaghs while talking about this item for obvious reasons.
2 days ago
She was just happe to be with Drew Carey on stage, and perhaps did not expect such a big win.
2 days ago
The segment started with a couple of people entering the stage wearing cakes over their heads.
2 days ago
The valuation he asked for was as crazy as the outfit he wore, and the sharks said no.
2 days ago
The contestant's answer had no lewd intention but Steve Harvey made sure it did.
3 days ago
Fans of the gameshow are known to be vocal about their needs and this was just an example of that.
3 days ago
The guest stood firm at what he wanted and Harrison was forced to raise his low-ball offer.
3 days ago
The contestant was confident in his abilities and he steered his team to an impressive win.
3 days ago
The sharks could not believe what they had just witnessed but it sure was entertaining.
4 days ago
The guest said that she wanted $15,000 but had to settle for just a couple grand.
4 days ago
Fans of the show were shocked she was not able to get it right after coming so close.
4 days ago
Corcoran was confident that the entrepreneur would take her deal but that was not the case.
5 days ago
The host's expressions upon seeing the answers on the board were absolutely priceless.
5 days ago
The guest was a friend of the Harrisons and he turned out to be quite the negotiator.
5 days ago
The guest had an item that was presumably made in the pre-1800s era, which made it valuable.
6 days ago
She had asked for $250,000 when she came and she walked away with close to $400,000.
7 days ago
The showrunners must have had a storm on their hands when they were called out.
7 days ago