Average rental values for Savills Prime Residential Index cities bounce back, achieving their strongest half-year performance in seven years, silencing negative sentiments over urban living
Rental values across the Index increased by 3.0% in the six months to December 2021, and over 85% of cities saw positive rental growth over the period. Driven by the great revival of megacities New York, London, and Singapore, as well as buyers' desire for the lifestyle on offer in the likes of Dubai and Miami.
The reawakening of love for New York’s charm
New York outpaced other North American cities achieving 11.5% rental value growth in the last six months of 2021. The easing of restrictions proved fundamental in driving positive net migration into the city: offices reopened, in-person education returned, and the revival of restaurants, entertainment and the arts helped to attract prime residential buyers. Most importantly, the lack of activity in 2020 created plentiful stock and relatively low prices, facilitating the strong growth in the final six months of 2021.
Miami, Los Angeles and San Francisco all experienced positive rental growth. While Miami attracts buyers for space and quality of life, the appeal of metropolitan life in Californian cities has attracted high-income professionals.
International tenants prove vital for Europe
In global megacity London, professionals, higher education students, and affluent international buyers rekindled their love for the British capital. Increased rental values across the capital recovered from their lowest value since June 2009.
Despite the pandemic, Moscow’s depleted prime rental stock and growth in demand for ‘elite’ apartments drove significant rental value growth in 2021. Conversely, the lack of international tenants in Amsterdam and Paris due to international travel restrictions negatively impacted their 2021 rental markets.
Singapore outpaces Asian counterparts
Severe international travel restrictions had widespread but varied effects on the prime rental markets in Asian cities. Top performer Singapore enjoyed 4.5% of rental value growth for the half year end of 2021, supported by foreign and domestic demand. However, the rental markets of Bangkok, Shenzhen, and other Asian cities that maintained national and international pandemic restrictions fared poorly in 2021.
Hong Kong’s rental market is substantially lower than its 2019 peak as strict quarantine measures, political uncertainty, and net outflows of migration took effect.
Global city: Singapore
Stand out cities
Along with the prime sales market, Dubai has experienced significant rental growth fuelled by national government measures and the return of professionals to the city.
Conversely, an oversupplied prime rental market and the ongoing effects of the pandemic hampered demand, particularly from international tenants, causing Kuala Lumpur’s prime rental values to suffer in 2021.
Read the articles within Savills Prime Residential Index: World Cities below.