Moscow tops prime property rental prices among 17 global cities
Prime rental property prices have increased by 0.5% in the year to June 2016 according to Knight Frank’s Prime Global Rental Index which tracks the change in luxury residential rents across 17 cities globally. The number of cities where rental growth has increased rose from seven in the previous quarter to ten this one.
Taimur Khan, Senior Research Analyst at Knight Frank examined the latest results and found that Moscow holds the top spot, with prime rents there rising by 11.1% year-on-year. This has been attributed to infrastructure investments in the city, combined with a marked slowdown in the contraction of the national economy and substantial gains in oil price over the last quarter, which he concludes, have underpinned rental growth. However, this contradicts the findings of the consultants' Global Residential Cities Index, discussed in our recent article, Global house price index shows China on the rise which show that average purchase prices in the Russian capital have declined by 11%.
Nairobi continues to be the weakest performing rental market with prime rents falling by 9.2% annually. Since Q3 2011 Nairobi has recorded annual prime rental growth of 9.7% on average, and accommodation there has been disproportionately expensive, so, Knight Frank argues that the market is now looking to rebalance.
The gap between these two cities at the top and bottom has notably widened. The strongest performing city (Moscow) and the weakest performing city (Nairobi) are separated by 20.3%. A year earlier the comparable figure was 15.1%.
In central London the prime rental market continues to slow, with rents falling by 3.0% in the 12 months to June 2016 due, it is thought to both higher stock levels and uncertainty in financial markets. It should be noted that the data for London largely covers the period leading up to the UK’s EU referendum.
For the third consecutive quarter, North America registered the strongest increase with prime rents rising by 4.4% in the year to Q2 2016. By contrast, over the same time period, Africa recorded the weakest performance with prime rents falling by 3.9% on average.
Whilst uncertainty caused by the UK's vote for Brexit and the outcome of the US presidential election, Knight Frank report that they are starting to see a more positive global economic landscape develop. Sustained and positive economic data from the US, growth in emerging markets led by easier access to credit markets and increased demand from China for commodities suggest a positive outlook for the remainder of 2016 they say, and for prime rental markets these factors are likely to stimulate demand from corporate tenants.
For the full report, visit Knight Frank Research