- Singapore beat New York to the top for largest rental rises (prime property)
- Sydney's luxury rental market is incredibly tight
- Hotels and holiday homes are helping to temporarily plug the gap
The latest from Knight Frank’s Prime Global Rental Index has seen the city that never sleeps usurped by surging Singapore.
Prime residential rents have been on the rise around the world, with both the final quarter of, and the entire year of 2022 seeing our very own Australian city of Sydney ranked among the world’s highest for prime residential rent growth; prime property is typically defined as the top five per cent of each market by value.
The Q4 scorecard
Knight Frank’s index tracked the movement in luxury residential rents across 10 global cities, finding Sydney rents for prime property rose by 3.7% over Q4 2022.
That placed the harbour city in fourth place, with Singapore recording the highest quarterly growth of 7.3%, with Auckland up 5.4%, and Tokyo up 3.9%.
2022 calls full time
For the year 2022, Sydney featured at sixth place with a prime property rent rise of 6.7%.
Singapore took the prime position in Knight Frank’s latest figures, taking over from New York. Singapore recorded year-on-year growth of 28.2%, followed by New York at 18.6%, London at 17.8%, Toronto at 15%, and Tokyo at 8.4%.
Knight Frank Head of Residential Research Michelle Ciesielski said prime rents had remained robust across many global cities and were still averaging double-digit annual growth, despite the overall rate of annual growth starting to slow.
“Sydney saw strong growth over the last quarter of 2022, in line with the rental growth occurring in the wider luxury residential market, and with a shortage of prime homes to rent in the city, prime rental rates are expected to continue strengthening,” she said.
“Total residential rental vacancies in Sydney have now fallen to a low of 1.4 per cent in February 2023, not seen since November 2011, according to Real Estate Institute of New South Wales figures.
“The low vacancy of rental stock can be seen across both the general market and the luxury market, and will lead to further rental growth across the two, with demand simply continuing to outweigh supply in this landlord’s market, at least in the short to medium term.”
Knight Frank Head of Residential Erin van Tuil said demand for prime residential rentals in Sydney came from a mixture of corporate tenants, people looking for somewhere to live while renovating their main residence and skilled professionals who are either expats returning or migrating from interstate and abroad.
“Due to the shortage of labour in Australia, many skilled professionals are taking up promotions to senior management roles from interstate, and international workers are being encouraged to migrate here,” she said.
“We’re seeing instances of companies contributing towards a six-month rental sign-on to entice new workers until the employee finds a longer-term property to rent, or even purchase, as it’s so incredibly tight to find stock for either instance.
“Even with this incentive, there are very limited properties to view, so many new workers to the city are taking up weekly rates with city hotels and extensively using holiday home platforms like Stayz and Airbnb whilst quickly getting acquainted with different pockets of the city as they uproot every few weeks.
“We’ve seen more clients taking up co-primary living in their country or coastal home for a good part of the month and have purchased a city pad for when they’re in town, but in many instances, this occasional convenience has removed a rental home from the market.
“There are also those still waiting on their house renovations to be completed and have extended their rental requirements after being delayed by severe weather events, delivery of materials and securing tradespeople.”
Ms van Tuil said many long-standing corporate rental agreements were removed from the market throughout the pandemic to save costs, as interstate and international teams couldn’t visit their Sydney office, and when they were added back into the rental pool, there was a short lull in prime rental growth throughout 2021.
“However since borders have reopened, hotels have needed to step in to fill this returning demand as there is simply not enough rental accommodation for new workers moving to the city,” she said.
“As a result, we’ve seen Sydney’s prime residential rents grow 15.8 per cent above their pre-pandemic level.”
