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House Rentals To Increase Around The World

June 11th, 2012 · No Comments

Rental values in the global residential property market are edging up fast, as demand from local and international corporate tenants’ increases swiftly, noted Savills, a London-based consultancy.

Based on the Savills World Class Cities Index, the average rental increase in the second half of 2011 hit 2.3 percent, with Paris occupying the top position as the most expensive city for tenants.

Paris tops the chart replacing London, with rents presently more than three times compared to Mumbai and Shanghai. The star performer was New York, where rental values climbed up by 6.5 percent in the first half and another 6.2 percent in the second half of last year.

“The majority of new world cities saw reduced rental growth in the second half of the year,” said the report.

“The notable exception was Singapore, where rental values rose by 4.4 percent in the first half of 2011 and a further 5.0 percent in the second half of the year.”

It observed that the introduction of the additional buyer’s stamp duty (ABSD) in December will added benefit to the rental market.  

By contrast, other new world cities, mainly Shanghai, Hong Kong and Moscow, witnessed rental growth decreased in the second half of 2011.

Savills also evaluate the cost of buying property in the world’s 10 leading global cities, and it reflects that costs of buying and occupying properties in Shanghai and Mumbai are higher in relation to comparatively low rents that they associate to more than four years of rental costs.

In Singapore property, the number is around three years.

 
“Demand for owner-occupation in these markets is likely to fall at times when little or no capital growth is expected,” said Yolande Barnes, head of Savills Residential Research.

“The result will no doubt be that the oriental new economies will become low-yielding, high volatility markets where the challenge will be to meet tenant demand to investor appetite for bringing forward supply,” she added.

 

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