Prime residential property rental prices recorded their weakest rate of growth for five years, according to new research published by real estate firm Knight Frank.
In its Prime Global Rental Index Q4 2014, a notable slowdown occurred and on an annual basis, the index rose by just 0.6 percent in 2014 – its weakest rate of growth since 2009.
Tokyo (pictured) headed the rankings for luxury rentals during 2014, ending the year 11.1 percent higher. Japan emerged from recession at the end of 2014, and the economy is predicted to rise by 1.3 percent in 2015 and 2 percent in 2016, according to the firm. Central wards, such as Chiyoda and Minato, are seeing a rise in tenant demand due to strong population growth and expat demand.
In Hong Kong, the potential interest rate rise in the United States and the continuation of cooling measures meant more land lords chose to rent their property rather than sell last year, adding to rental supply and suppressing rental growth.
Singapore was the only key financial centre where luxury prices and luxury rents declined in 2014.
Kate Everett-Allen, Partner at Knight Frank Residential Research, said: “The weak results underline the global economy’s fragility during 2014, but also hide the fact that 12 of the 17 cities we cover saw luxury residential rents increase or remain static in 2014.
“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.”
Looking at Asia Pacific, Nicholas Holt, Head of Research at Knight Frank Asia Pacific, added: “The economic slowdown in China remains a concern across the world considering the growing connectivity of the Chinese economy.
“With macro-“uncertainties” looming over 2015, we take a conservative view on the performance of the index in 2015.”
The report stated that the Knight Frank Prime Global Rental Index is an important resource for investors and developers looking to monitor and compare the performance of prime residential rents across key global cities. Prime property corresponds to the top 5 percent of the housing market in each city. The index is compiled on a quarterly basis using data from Knight Frank’s network of global offices and research teams.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
