Yields have moved out fastest in most international global cities, where rents have risen particularly quickly during the pandemic recovery (see chart, below). Cities such as Dubai (+60 bps, to 5.3%) and Singapore (+40 bps, to 2.9%) have seen substantial inflows of international tenants, leading average yields to rise above pre-pandemic levels.

Over the same period, prime yields in London rose by +25 bps to 3.2%; the city remains a global higher education hotspot, and international student demand further accelerated the lack of prime stock in the UK capital. The Spanish cities of Barcelona and Madrid also experienced yield increases driven by re-opening borders, permitting the return of executive tenants demanding luxury housing.

Yields in Chinese cities have fallen since the onset of the pandemic as rents increased more slowly than capital values. While the prime rental market remained healthy through most of 2022, the last few months of the year saw demand begin to fall in China’s major cities amid wider domestic uncertainty, leading landlords to reduce rents.

_{Read the other articles within Savills Prime Residential Index: World Cities below}