Rents start to dip for luxury apartments in New York and Hong Kong

LUXURY rents in some of world’s most expensive cities have started to slip after record price increases during the pandemic.

Prime residential rents, defined as the top 5 per cent of the market, declined 0.6 per cent in the fourth quarter compared with the previous three months, according to real estate company Knight Frank, which tracks 10 global cities.

In New York, prime rents were down 2.5 per cent compared to the prior quarter, while Hong Kong dropped 2 per cent. Toronto posted the biggest decline, falling 4.8 per cent.

To be sure, luxury rents remain elevated. Overall, the global cities posted a 5.2 per cent increase in Q4 compared with a year earlier. That’s down from recent highs, but still double the long-term rate, according to Knight Frank.

New York, where the median rent for the top 5 per cent of the market is US$4,195, was roughly flat year over year. But each of the other nine cities posted an annual gain.

Prime rents in Sydney increased 18 per cent year over year, the result of limited construction in the pandemic and internal migration to the city.

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Knight Frank said that it expects slower rent growth this year as tenants reach their affordability limits and more supply comes to the market.

“Global rental markets experienced one of their strongest booms on record the past three years,” said Liam Bailey, Knight Frank’s global head of research. “Expect slower growth this year as the ability for tenants to bid higher is limited by affordability constraints.” BLOOMBERG