Global Rental Market Cools

The pace of rental growth is cooling in top-tier location around the world, reports Abode2 with the latest Prime Global Rental Index recording the lowest annual number since Q2 2021.

Across the 15 tracked cities, rents increased by an average of 3.7% in the 12 months to March 2024, down from +5.3% seen in the final quarter of 2023.

Rents are, however, still climbing – with 80% of cities seeing increases, averaging at +0.7% in Q1 2024.

Prime global rents are now running 26% higher than in Q1 2021. And Knight Frank expects rental growth “to resume its upward trajectory later in the year, driven by sustained demand in key global cities.”

Sydney saw the highest rate of rental price inflation in Q1 (+4.5% in the quarter taking the annual change to +17.3%). London rents budged up by just 0.3% in Q1, but the UK capital is still joint-second on KF’s table of annual rental growth (level-pegging with Auckland in New Zealand at +5.6%).

After a period of substantial rental growth, it’s perhaps not unduly surprising to see policymakers exploring solutions to high rents, as evidenced by the discussions around rent caps in London. While the Labour party is reconsidering their stance on this policy, the very conversation underscores the pressure felt in the market.

Despite this, industry forecasters expect rental growth to resume its upward trajectory later in the year, driven by sustained demand in key global cities, with the rebalancing between supply and demand crucial in shaping the rental landscape moving forward.