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The Global Rental Market: Rents Rise in Singapore, Lisbon, and Berlin
Singapore, Lisbon, and Berlin Experience Highest Growth in Prime Residential Rents
A recent research report by Savills, a real estate services company, has revealed that prime residential rents have increased the most in Singapore, Lisbon, and Berlin in the first half of the year. According to data from the British company, prime rents in Lisbon saw the highest surge, with a 13.9% increase from December 2022 to June 2023. Singapore followed closely behind, with a 13.6% rise, while Berlin experienced a 9.2% growth during the same period.
Lisbon and Singapore Show High Levels of Price Growth
Savills noted that Lisbon and Singapore's rental markets have seen significant price growth over the past 18 months, with rents increasing by more than 40%. The company attributed this rise to a rise in demand for prime homes from international tenants. On the other hand, Berlin's increase in prime rents was due to an influx of wealthy residents.
Singapore Prime Rents Due to Construction Delays
The notable hike in prime rents in Singapore can be attributed to construction delays during the Covid-19 pandemic. However, Savills Research and Consultancy Executive Director, Alan Cheong, expects the completion of 18,000 private residential units this year to lead to a mild correction in prices. Despite this, Cheong predicts that prime luxury rents in Singapore could still rise by about 15% year-on-year, with the majority of the increase front-loaded in the first half of 2023.
Asia-Pacific Region Sees Increase in Prime Rents
According to Savills' research, 11 out of the 30 cities that experienced the highest increase in prime rents were located in the Asia-Pacific region. Following Singapore, Kuala Lumpur secured the fifth spot with a 4.3% growth in prime rentals from December 2022 to June 2023. Bangkok closely followed in sixth place with a 4.2% increase. Hong Kong and Tokyo also made the list, with Hong Kong ranking twelfth with a 2.7% surge and Tokyo ranking seventeenth with a 1.7% climb in prices.
Kuala Lumpur and Bangkok Market Recovery
Savills' report states that Kuala Lumpur and Bangkok's rental markets are regaining momentum not seen since before the pandemic. They attribute Hong Kong's rise in prime rents to increased leasing demand after the removal of Covid-19 restrictions at the end of 2022. Tokyo is benefiting from people moving back to the city.
Tight Supply and Growing Demand in the Rental Market
Paul Tostevin, the head of Savills World Research, highlighted that the supply of prime residential homes is expected to remain tight in many cities. Factors such as high construction costs, development challenges, and rising debt costs pose challenges to the market. Tostevin predicts that rents will continue to outperform capital values for the remainder of 2023 and the medium-term. With growing demand and limited supply, the majority of cities in the Index are expected to experience positive rental growth in the coming months.
Conclusion: Implications for New Businesses in the Global Rental Market
The surge in prime residential rents in Singapore, Lisbon, and Berlin, as highlighted by Savills' recent research report, signifies important trends in the global rental market. For new businesses in the real estate sector, there are several implications to consider:
1. Potential Opportunities: The significant increase in prime rents in these cities reflects growing demand from international tenants and an influx of wealthy residents. This presents potential opportunities for new businesses involved in property management, real estate investment, and luxury rentals.
2. Market Response to Construction Delays: In the case of Singapore, the notable rise in rents can be attributed to construction delays during the Covid-19 pandemic. New businesses in construction and development may need to adapt their strategies to align with the expected completion of private residential units, which could result in a mild correction in prices but still present opportunities for growth.
3. Asia-Pacific as a Promising Market: The Asia-Pacific region is experiencing an overall increase in prime rents, with cities like Kuala Lumpur, Bangkok, Hong Kong, and Tokyo showing positive growth. New businesses should consider expanding their presence in this region, especially in cities demonstrating market recovery or benefiting from evolving circumstances, such as the lifting of Covid-19 restrictions or the return of residents.
4. Limited Supply and Growing Demand: The tight supply of prime residential homes, coupled with growing demand, presents a continued opportunity for rental market growth. For new businesses, this emphasizes the need to identify niche markets, provide unique offerings, and adapt strategies to cater to the increasing demand amidst limited supply.
Overall, the rising prime residential rents in Singapore, Lisbon, and Berlin, alongside broader trends in the Asia-Pacific region, present both challenges and opportunities for new businesses in the global rental market. By understanding market dynamics and tailoring their strategies accordingly, businesses can position themselves for success in this evolving landscape.
Article First Published at: https://www.cnbc.com/2023/07/20/these-countries-saw-highest-hike-in-prime-rents-for-h1-2023-savills.html.svg)
