The prime rental market records astonishing growth globally
Savills’ “Prime Residential” index reveals a 5.9% increase in the average ‘prime’ rental price in the world’s major cities during 2022, almost doubling the growth of luxury home sale prices, which stood at 3.2%. This rise in prime rents was mainly driven by a shortage of supply and high demand in this segment, resulting from the return to cities after the restrictions of the pandemic and the increase in interest rates in the second half of 2022.
Among the cities with double-digit prime rental growth, we find Singapore, Lisbon, Dubai, New York, and London. However, in these places, the increase in sale prices was considerably lower. Singapore led the ranking with a 26.2% increase in prime rents, compared to a 6.8% increase in the sale price of luxury homes.
Lisbon, with a 25.4% increase in prime rentals, ranks above the rest of the European cities, as well as in the increase in the sale price of luxury homes, which grew by 5.6%. London (11.6%) and Milan (8.1%) follow in terms of prime rental growth in Europe, while Milan (5.7%) slightly surpasses Lisbon in average luxury home prices.
Dubai (22.9%), New York (11.1%), and Sydney (10.9%) also recorded significant increases in prime rents, highlighting the heterogeneity of growth in this sector worldwide. On the other hand, Madrid and Barcelona experienced more modest increases, with increments of 4.6% and 2.9% respectively in prime residential rents in 2022, below the global average increase.
As for the sale price of prime homes, Miami and Dubai topped the list with double-digit increases, 25.4% and 12.5% respectively. Savills expects a slowdown in price growth in Miami for 2023, ranging between 4% and 5.9%.
Globally, the international consultancy anticipates a deceleration in the increase in luxury home sale prices, estimating a growth close to 0.5% in 2023. However, the solid structure of the prime residential market and the lack of supply will keep prices slightly on the rise. Some cities such as Hong Kong, San Francisco, Sydney, and Shenzhen have already recorded declines in luxury home sale prices during 2022, with drops of 8.5%, 5.2%, 3.7%, and 1.6% respectively.
In summary, the prime rental market experienced significant growth in 2022, especially in cities such as Singapore, Lisbon, Dubai, New York, and London. Although forecasts for 2023 point to a slowdown in the increase of luxury home sale prices globally, the solid structure of the prime residential market and the scarcity of supply are expected to continue driving an increase in rental prices in major cities worldwide.
Font: Idealista News
