Research article

What has happened to yields?

Average prime residential gross yields across our prime cities stand at 3.1% as of December 2020, slightly down from 3.2% at the same point the year prior

Average prime price growth for the index outpaced rental value growth in 2020. As factors such as lower corporate demand, rising supply from short-lets, and a move away from urban environments have impacted prime rental growth in many cities. The outperformance of prices has, however, been modest meaning we have not seen a significant shift in average residential yields.

New York experienced the largest yield shift of the cities in the index. The average yield here stood at 4.2% in December 2020, compared with 4.5% a year prior. Dense urban living fell out of favour as a result of the pandemic and this has impacted New York’s residential market. Rental values have, however, seen a larger fall over the past year. While owners may hold onto their properties during a crisis if they do not need to sell, landlords are more likely to lower rental values in order to keep their property occupied.

Moscow saw the largest shift of the European cities in the index moving to 4.8% in December 2020 from 5.0% in December 2019. Unlike the purchaser market, international and corporate tenants drive the prime rental market in the Russian capital. In Asia Pacific, Bangkok saw the largest change over the same period, falling to 4.3% from 4.6%. The prime rental market in the Thai capital has a high level of supply, while demand is predominantly driven by international tenants.

Read the articles within Savills Prime Index: World Cities below.

Other articles within this publication

5 other article(s) in this publication