Emerging markets push prime rental index

The performance of prime rents across global cities is intrinsically linked to employment, business confidence and recruitment.

At the top end of the world’s rental markets corporate demand is increasingly influential, accounting for up to 85% of prime rental demand in some cities.

As in the prime sales market, it is those cities that generate strong foreign demand that have seen the strongest uplift in rents since the global recession hit in 2008.

Prime rents in London, New York and Hong Kong have risen by 25.7%, 23.9% and 35.6% respectively since their recessional lows.

While the latest results show prime rents continue to push higher in New York and Hong Kong, rents are softening in London.

Jemma Scott, Knight Frank’s Head of Corporate Services said: "London’s current weakness in headline rents is not due to a wider downturn in demand from tenants. Instead, affordability constraints and the weaker performance of London’s economy are limiting the scope for rental growth.

"Lettings volumes were strong in the second quarter as the Olympic Games prompted some corporate tenants to arrive early to secure the best properties. Demand from US and French tenants proved particularly strong."

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