Prime rents are rising strongly in many emerging markets, with Dubai leading the climb with an 18.3 per cent rise in the year to March, a report said.
Prime rents in key cities worldwide rose by 0.2 per cent in the first quarter of 2013, marking lowest rate of quarterly growth since late 2009, according to the Prime Global Rental Index released by Knight Frank, a global property consultancy.
The rise in Dubai was followed by Nairobi and Beijing rising by 13.9 per cent and 12.3 per cent respectively in the year to March, said the report.
“By comparison, Hong Kong, New York and London saw prime rents fall by 2.3 per cent, 2.6 per cent and 3.1 per cent over the same period,” said Kate Everett-Allen, International Residential Research of Knight Frank.
“In this second group of cities, the rental markets have suffered as relocation budgets for executives have been trimmed during a period of weaker financial sector performance,” she added.
Despite the slower rate of growth this quarter, the index, which tracks the performance of luxury lettings markets worldwide and which is increasingly influenced by corporate and expatriate demand, has now risen for 15 consecutive quarters and stands 20.3 per cent above its low in the second quarter of 2009.
Global mobility is on the rise as companies look to plug their skills gap but the latest figures suggest it is increasingly a west to east shift with many multinationals relocating a growing portion of their key talent to growth markets in Africa, China and the Middle East, said Everett-Allen.
A regional breakdown of rental performance confirms this trend. The Middle East, Africa and Asia saw average growth of 13.1 per cent, 7.0 per cent and 3.1 per cent respectively in the year to March, she pointed out.
Prime rents in Europe and North America fared less well, recording average growth of 0.9 per cent and -0.7 per cent. Here, salaries are failing to keep pace with inflation and the economic recovery remains in a fragile state.
“With the US jobs market picking up and tentative signs of improving business sentiment in the Eurozone we may see rents strengthen in New York and potentially London in the second half of 2013. However, we expect the emerging markets to continue to top the rankings as established industries in Europe and the US look to tap into new world markets,” added Everett-Allen.