Prime residential property rents have slumped to their lowest increase in six years, according to property experts.
Worldwide, the Knight Frank Prime Global Rental Index increased by just 0.6% in the last quarter of 2014.
The firm explained that weak economies around the world dragged down the index – with Moscow the biggest faller at -16%.
One issue for Moscow rents are US economic sanctions over the annexation of The Crimea and military incursion in The Ukraine.
Prime rents in Moscow are generally US dollar denominated and the weakening rouble has seen exchange rates plunge.
The rouble started the year at 33 to the dollar, but ended at 56 roubles to the dollar.
Tokyo tops table
Rents for luxury properties also fell back in Vienna, Geneva, Singapore and Beijing.
Tokyo and Dubai led the way with 11.1% and 8.1% increases, but only 11 cities registered rent rises for the period and Toronto stood still.
Rents in Hong Kong dropped as more owners elected to let, causing a spike in supply that exceeded demand.
“Prime residential rents are coupled to business growth and employment,” said the firm’s researcher Kate Everett-Allen. “Where there is a strong economy and good salaries, rents rise.
“How economic factors change in Europe over the coming months will have a big impact on rents in the Eurozone. Deflation is falling away and salaries are increasing, and if this trend continues, we should expect to see rents rise.”
| Prime Global Rental Index Q4 2014 | ||
|---|---|---|
| Rank | City | 12 month change |
| 1 | Tokyo | 11.1% |
| 2 | Dubai | 8.1% |
| 3 | Zurich | 6.9% |
| 4 | Cape Town | 6.5% |
| 5 | Tel Aviv | 5.0% |
| 6 | London | 3.3% |
| 7 | Nairobi | 2.8% |
| 8 | Guangzhou | 2.3% |
| 9 | Shanghai | 2.2% |
| 10 | Hong Kong | 1.7% |
| 11 | New York | 0.3% |
| 12 | Toronto | 0.0% |
| 13 | Vienna | -2.5% |
| 14 | Geneva | -2.8% |
| 15 | Singapore | -3.7% |
| 16 | Beijing | -6.3% |
| 17 | Moscow | -16.0% |
| Source: Knight Frank | ||
