House prices: volatile equity markets and Brexit fears are hurting prime global rents, says Knight Frank
Volatile equity markets and economic weakness in emerging markets dragged rental prices for high-end homes in key global cities lower last year, new research shows.
Knight Frank's prime global rental index, which tracks the change in luxury residential rents across 17 cities globally, fell by 1.1 per cent in 2015, down from growth of 2.5 per cent in 2014.
Geneva replaced Moscow as the weakest performing market, with rents falling by 7.1 per cent annually, in part due to strong supply.
At the other end, Guangzhou in China remained the strongest performing city, with an annual rental growth of 5.3 per cent in 2015. This is despite market conditions being favourable for buyers with record low interest rates and a relaxation of financing for second homes and foreign buyer restrictions in China last year.
There was a split in how the world's top financial cities performed, with Hong Kong and Singapore recording annual declines of 0.8 per cent and 3.8 per cent. In contrast Tokyo, New York and London recorded a rise in prime rents year-on-year of 3.3 per cent, 2.4 per cent and 0.7 per cent respectively.
London was the seventh best performing city behind Cape Town, Shanghai, New York, Toronto and Tokyo.
By region, North American cities recorded the strongest rise in prime rents, up 2.8 per cent on average whilst Europe saw the largest decline, with average prime rents decreasing by 3.5 per cent.
Taimur Khan, a research analyst at Knight Frank, said: "Muted performance in equity markets and record low commodity prices contributed to the index’s weaker performance in 2015."
He said uncertainty in the world's prime rental markets is likely to continue this year, overshadowed by June's Brexit vote and wider global economic uncertainty.