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A recent research report by Savills, a real estate services company, revealed that prime residential rents in three cities experienced significant increases during the first half of the year. Lisbon saw the most substantial surge with a 13.9% rise in prime rents, followed closely by Singapore with a 13.6% increase, and Berlin with a 9.2% rise.
The rental market in Lisbon and Singapore has been witnessing strong growth over the past 18 months, with rents increasing by over 40%. This surge is attributed to higher demand for prime homes from international tenants. In contrast, the increase in prime rents in Berlin was mainly due to an influx of wealthy residents moving into the city.
In Singapore, the significant increase in prime rents was partly due to construction delays caused by the Covid-19 pandemic. However, as around 18,000 private residential units are slated to be completed this year, a mild correction in prices is expected. Despite the projected correction, prime luxury rents in Singapore could still witness a year-on-year increase of approximately 15%, with most of the rise occurring in the first half of 2023.
The research conducted by Savills highlighted that 11 out of the 30 cities experiencing the highest growth in prime rents were located in the Asia-Pacific region. Kuala Lumpur secured the fifth position on the list with a growth of 4.3% in prime rentals, followed closely by Bangkok with a 4.2% increase. Hong Kong ranked twelfth on the list with a rise of 2.7% in prime rents, and Tokyo came five positions lower with a modest climb of 1.7% in rental prices during the same period.
The report also stated that Kuala Lumpur and Bangkok's rental markets are experiencing a resurgence in momentum, reaching levels not seen since before the pandemic. Hong Kong's surge in prime rents is attributed to an increase in leasing demand following the removal of Covid-19 restrictions, while Tokyo is benefiting from an influx of people moving back to the city. However, the report predicts that the supply of prime residential properties will remain limited in numerous cities, facing challenges such as elevated construction expenses, difficulties in development, and increasing debt costs.
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