London saw luxury residential rents rise 16.9% over the year to March, against a global increase of 8.5% for the sector.
Of the 10 markets tracked by the Knight Frank Prime Global Rental Index, growth is being led by Singapore, which saw rents rise 31.5% over the past 12 months, with 6.4% in the last quarter alone.
London follows, while Sydney, Toronto and New York also recorded double digit growth. However, growth rates have slowed as the year has progressed, with London, for example, seeing growth of 5.7% over the past six months and 2.7% over the past three months.
Auckland and Hong Kong recorded negative annual growth, although rents in both cities have risen in the past three and six-month periods.
Knight Frank said strong rental growth since the pandemic has been driven by limited supply, as construction was disrupted during lockdowns and strong residential sales demand took stock out of the market.
There has also been a resurgence in demand as workers moved back to cities as economies reopened.
Knight Frank global head of research Liam Bailey said: “Despite a slowdown in the rate of growth, rental prices are hitting new records as workers return to city economies.
“With housing construction volumes remaining low due to material shortages and high build costs, rents are expected to continue to rise well above trend through 2023.
“The key question for investors is how governments will react to higher rental costs. For now, rent caps seem to be off the table in most markets, and policy focus is shifting to encouraging a surge in new build-to-rent accommodation.”
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