Knight Frank, the independent global property consultancy, today launches the Prime Global Rental Index for Q3 2016. The index, which tracks the change in prime residential rents across 17 global cities, ground to a halt recording 0% annual growth in the year to September 2016, down from 0.7% last quarter.
Results for Q3 2016:
- Despite the slowdown in aggregate performance, the number of cities where annual rental growth is positive remains at 10, albeit the rate of growth has slowed down.
- North America continued to be the strongest-performing world region with average annual prime rental growth of 5.1%.
- Toronto leads the rankings with prime rents increasing by 7.9% on an annual basis due to rising home ownership costs and a narrowing vacancy rate.
- Ranked second on the index, Tokyo’s prime rents increased annually by 7.3% with the fundamentals driving this performance being similar to that of Toronto.
- Africa registered the weakest performance with prime rents falling 3.7% on average in the year to September 2016. Nairobi ranked last with prime rents falling by 10.8% year-on-year.
Taimur Khan, Senior Research Analyst, explains, "Whilst uncertainty remains over the form of Brexit and the stance on global trade which President-elect Trump is likely to take, we can be more confident that further rate hikes are imminent in 2017 to counteract (expected) expansionary fiscal policy. However, any rise may have significant knock-on effects particularly for emerging markets. Record levels of sovereign debt in some emerging markets means that even a small increase in interest rates may suppress corporate activity, which in turn could hinder economic growth and prime rental market performance.”