Growth in global prime rents has slowed dramatically on the back of fears over eurozone contagion.
According to Knight Frank’s Prime Global Rental Index, rents in the world’s top cities grew by less than 2% in the year to March 2012, the weakest annual rate of growth since Q4 2009.
Prime London rental growth has slowed from 6.3% to 1.2% in the same period as business confidence dipped, hitting corporate relocations.
The number of jobs available in London’s financial services sector declined by 57% in March 2012 compared to the same month a year earlier, according to recruitment consultant Morgan McKinley.
The Prime Central London Rental Index shows rents peaked in September 2011, with six consecutive marginal monthly falls recorded since.
Rents in March 2012 were 1.2% higher than a year earlier but 0.8% below their September 2011 peak.
But the long-term prospects for the sector remain positive, according to Knight Frank’s Global Corporate Lettings Review, with global mobility among international firms – a vital driver for the prime rental market – forecast to increase significantly.
The number of international assignments worldwide is estimated to have increased by 25% between 1998 and 2009 and is forecast to rise by a further 50% by 2020.
Prime residential rents globally rose 0.4% in the first quarter 2012 but the overall figures mask significant variations among the top cities.
Nairobi was the strongest performer on an annual basis, up 14%, with Moscow the strongest in the quarter, up 6%. Shanghai has also benefited from a 54% increase in its expat community since 2005, while Mumbai’s rental market has been buoyed by rules preventing foreign home ownership.
In Europe the average prime rent rose by 2.2% in the 12 months to March despite the ongoing eurozone fears.
Bahrain’s capital Manama saw the biggest drop, down 20% compared with a year earlier.
