The largest cities in the United States, United Kingdom and Canada are currently leading the world when it comes to rental growth in the Prime areas, Knight Frank research shows.
After the pandemic-induced lull rents have bounced back annually by a huge 38.5% in New York, followed by London at 26.4% and Toronto at 17.2%.
In New York rents have jumped by 10.6% in the past three months alone. In London that figure stands at a more moderate 3.6%.
In 2020 all three cities saw tenants depart, causing rents to fall.
Many have now returned following the lifting of covid restrictions and the reopening of businesses, while there’s a rental shortage stock caused by a sales boom which has motivated some landlords to cash in.
Indeed, in London there’s been a 72.7% decline in rental listings in Prime London annually.
Following this rapid period of rental growth, rental inflation is expected to cool rapidly over the rest of 2022 now rents have reached pre-pandemic levels and economic growth has stuttered.
However Toronto may be an exception to this rule, Knight Frank warned.
Canadian PM Justin Trudeau plans to ban overseas buyers from buying property for two years in Canada, with a view to curbing house price inflation in cities like Toronto and Vancouver.
This will force those relocating from overseas to rent rather than buy.
In prime central London, there are early signs that supply may be slowly picking up as prices soften and disappointed vendors unable to achieve their price ambitions opt to rent their home instead.
Hong Kong is the only major city to see prime rents decline over a quarterly basis, down 1.1% in the three months to March 2022. A new wave of Covid-19 infections and the resulting border closures saw domestic tenants the only source of demand.
Across 10 Prime cities across the world rents have typically increased by 11.9%.