Prime rents in key cities globally rose by 0.2 percent in Q1 2013, with a strong rise in many emerging markets such as top three markets Dubai (18.3 percent), Nairobi (13.9 percent) and Beijing (12.3 percent) in the year to March, according to the Knight Frank Prime Global Rental Index.
Prime rents in key cities globally rose by 0.2 percent in Q1 2013, with a strong rise in many emerging markets such as top three markets Dubai (18.3 percent), Nairobi (13.9 percent) and Beijing (12.3 percent) in the year to March, according to the Knight Frank Prime Global Rental Index.
Furthermore, the report reveals that this strong increase is being overshadowed by weakening rents in some of the world’s more established financial centres such as Hong Kong (2.3 percent), New York (2.6 percent) and London (3.1 percent).
In these locations, rental markets have suffered as relocation budgets for executives have been trimmed during a period of weaker financial sector performance
Kate Everett-Allen, international residential researcher at Knight Frank, points out that this is the Index’s lowest rate of quarterly growth since late 2009.
“Despite the slower rate of growth this quarter, the Index, which tracks the performance of luxury lettings markets worldwide and which is increasingly influenced by corporate and expatriate demand, has now risen for 15 consecutive quarters and stands 20.3 percent above its low in Q2 2009,” she says.
She explains that global mobility is on the rise as companies look to plug their skills gap, but the latest figures suggest it is increasingly a west to east shift with many multinationals relocating a growing portion of their key talent to growth markets in Africa, China and the Middle East.
Average growth in the Middle East was (13.1 percent), Africa (7.0 percent) and Asia (3.1 percent), while Europe and North America recorded average growth rates of 0.9 percent and -0.7 percent respectively as salaries fail to keep pace with inflation and the economic recovery remains in a fragile state.
With the US jobs market picking up and tentative signs of improving business sentiment in the Eurozone, we may see rents strengthen in New York and potentially London in the second half of 2013, says Everett-Allen.
“However, we expect the emerging markets to continue to top the rankings as established industries in Europe and the US look to tap into new world markets.”
Luxury property rentals in South Africa
The Index tracked 16 cities with only two African cities, Nairobi in Kenya ranked number 2 (13.9 percent) and Cape Town in South Africa (0.0 percent) in the year to March, according to the report.
Pam Golding Properties rented this luxury home in Bishopscourt Cape Town over the festive season for just under R1 million – and this equates to around R37 000 per day for just one month.
The top 10 cities according to rental increase are Dubai, Nairobi, Beijing, Tel Aviv, Zurich, Guangzhou, Shangai, Geneva, Singapore and Toronto.
Despite prime rentals not showing any change according to the Knight Frank, Pam Golding Properties (PGP) notes a strong demand for luxury homes in Cape Town.
The agency reports that an apartment at the Water Club in Granger Bay is being rented for R80 000, in Bantry Bay, two homes command rentals of R49 500 and R75 000 per month, R50 000 in Fresnaye, R45 000 in Camps Bay and Constantia and between R50 000 and R75 000 for homes in the sought-after suburb of Bishopscourt.
According to PGP’s rentals manager for the Cape Metro region, Dexter Leite, tenants at the high end of the market are typically corporate clients such as managing directors, chief executive officers, directors or senior professionals appointed from abroad.
The leases are often between 12 to 24 months, however, because of demand for luxury homes from corporate tenants, the agency caters for those working on fixed-term contracts, while shorter-term rental leases are often used as a stepping stone for executives who are relocating to the Cape and first want to rent while they investigate where they intend to buy.
Leite says demand for rental properties is far outstripping supply in a number of areas, for example, there is a shortage of stock in the three and four bedroom family homes in the Southern Suburbs, City Bowl and Camps Bay and two bedroom apartments in City Bowl and Sea Point. – Denise Mhlanga
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