Rents for prime residential property across the world has dropped for the third quarter in a row, according to the latest data.
A survey by international property firm Knight Frank scrutinised rents in 17 major cities and found that they decreased by 0.5% in the first three months of this year. Only six of the cities reported a rent rise over the past 12 months.
The Canadian city of Toronto has the fastest growing rents – posting an 8.9% increase in the year to the end of March 2016, as strong demand from tenants and a low vacancy rate buoyed the market.
Canada and the USA was the strongest performing region with rents increasing by an average 3.3%. Nairobi, Kenya, was bottom of the rankings after rents slumped by 7.9%, due to a lack of demand from businesses and too many new properties coming to the market, said the firm’s Prime Global Rental Index.
London rents down
London saw rents fall by 1% to the lowest annual rate of increase seen in two years. However, yields of 3.7% were ahead of returns posted by hedge funds and the stock market.
Part of the blame for London prices slipping is due to a changing tax landscape for overseas investors and buy to let landlords.
“The index is expected to rebound as some of these factors are absorbed,” said Knight Frank research analyst. But the effect of Brexit will have to be taken into account as this report was drafted before the referendum.
Highs and lows
Rents in New York dropped by 2.3%, while Asian cities also followed the trend. Hong Kong saw a 5.2% decrease and Singapore a decline of 3.6%. Shanghai bucked the trend with a 1.4% increase.
Despite the drop in rents, Hong Kong remains the most expensive city for expats in Asia, according to a recent cost of living survey. Zurich, Switzerland, also rated highly as an expensive city for expats, but also recorded a drop in rents – by 1.7%.
Besides Toronto and Shanghai, the other cities with rent increases were Guangzhou, China; Cape Town, South Africa; Vienna, Austria and Tel Aviv, Israel. Rents stood still in Taipei, Taiwan.