Singapore has displaced New York from the top spot in the Prime Global Rental Index standings collated by real estate consultancy Knight Frank, with annual rental growth rising from 23 percent in the third quarter to 28 percent in the fourth quarter of the calendar year 2022, driven by limited stock and strong demand.
The index tracks the movement of prime residential rents across 10 cities using data from the company’s global research network. The index tracks nominal rents in local currency.
Overall, the Prime Global Rental Index increased 10.3 percent in the year to December 2022, down from a peak of 11.8 percent in March 2022, the report added.
The city-state could stay at the top of the list for some time. “Singapore’s new visa rules, introduced in January 2023, offer a five-year work visa for specific tech-based professionals who earn over $30,000 per month, and the measure is likely to supplement tenant demand further,” the report said.
New York came second in the annual rankings, registering a 19 percent annual growth, with rents up 48 percent since their pandemic low in the fourth quarter of 2020, the report added.
According to the index, London registered 18 percent prime rental growth in the year to December 2022. Demand remains robust with prospective tenants 27 percent above their five-year average in November, the report said.
Knight Frank forecasts rents in prime central London areas will rise by 6 percent in 2023, as potential buyers wait out the economic turbulence.
Toronto and Tokyo registered annual rental growth of 15 percent and 8 percent, respectively, with both markets facing competitive demand.
Hong Kong saw the largest fall in prime rents year-on-year, down 6.4 percent, with several international corporations having deferred expansion plans in the region, weakening demand from corporate tenants.
With many investors eyeing the rental market as an inflation hedge that provides shelter during economic turbulence, “we expect prime investment markets to see robust activity in the short to medium term”, the report added.