Marina Bay Sands Hotel and Singapore Flyer with private condominiums in the background, Singapore, March 23, 2022.
Rosslan Rahman | AFP | Getty Images
Rents in prime residential areas in Singapore, Lisbon and Berlin rose the most in the first half of the year, according to the latest research report from real estate services firm Savills.
Prime rents rose the most in Lisbon at 13.9% between December 2022 and June 2023, followed by Singapore at 13.6% over the same period and Berlin at 9.2%, according to the UK firm.
Savills said the rental markets in Lisbon and Singapore had experienced high levels of price growth over the past 18 months, with rents rising by more than 40 per cent, attributing to increased demand for quality residences from international tenants.
However, the rise in prime Berlin rents is due to an influx of wealthy residents, the study said.
The surge in prime rents in Singapore is due to construction delays amid the Covid-19 pandemic. But Alan Cheong, executive director of Savills Research and Consulting, said that with 18,000 private homes to be completed this year, a modest correction in prices is expected.
Cheong emphasized, however, that rents for prime luxury homes in the city-state are still likely to rise by about 15% year-on-year, and the increase will be brought forward to the first half of 2023.
Asia’s Luxury Rents Rise
Eleven of the 30 cities with the highest growth in prime rents are in the Asia-Pacific region, according to Savills research.
After Singapore, Kuala Lumpur ranks fifth, with prime rents increasing by 4.3% from December 2022 to June 2023, followed by Bangkok with a 4.2% increase.
Hong Kong ranked 12th with an increase of 2.7%, and Tokyo dropped 5 places with an increase of 1.7%.
Residential buildings in Kachidoki Ward, Tokyo, Japan, Saturday, February 11, 2023.
Kosuke Okahara | Bloomberg | Getty Images
The rental markets in Kuala Lumpur and Bangkok are “resuming momentum not seen before the pandemic,” the report said. Hong Kong’s surge in prime rents is due to higher rental demand after Covid-19 restrictions are lifted in late 2022, while Tokyo profits from people moving back into the city, the report said.
The supply of prime dwellings in many cities is expected to remain tight, said Paul Torsteven, head of research at Savills World, pointing to headwinds such as high construction costs, development challenges and rising debt costs.
“Looking forward, we expect rents to continue to outperform capital values through the remainder of 2023 and mid-2023, as supply remains scarce in the face of growing demand, while most cities in the index will see positive rent growth through the remainder of 2023,” said Tostevin.