Hong Kong is the most expensive city to rent a prime property with a monthly budget of $10,000, while Dubai and the Spanish capital Madrid offer residential tenants most value for money with bigger apartments, according to a Knight Frank study.
Despite pandemic-driven headwinds and political uncertainty, prime rents in Hong Kong averaged $6.70 per square foot at the end of 2020, allowing a tenant with a budget of $10,000 per month to rent units with under 1,500 square feet, the property consultancy said in a research note on Monday.
The global comparison is based on a three-bedroom apartment in a central location, but stand-alone, or detached homes in some cities can achieve even higher premiums. Earlier this year, a house in Hong Kong rented for $174,000 a month, which on an annual basis equates to more than $2 million.
Prime rental market globally took a hit amid the pandemic, which tipped the world economy into its worst recession since the 1930s and led to wide spread movement restrictions.
It is followed by Singapore, London and Sydney, with renters securing between 2,500 and 3,000 square feet for the same budget, according to the report.
Of the eight key global cities tracked, Dubai – the commercial and trading hub of the Middle East – and Madrid offer the largest spaces at 4,800 and 5,000 square feet, respectively.
Dubai’s property market, which softened amid oversupply concerns and a coronavirus-induced economic slowdown, is bouncing back this year.
Concerted efforts by the government to stimulate economic activity and its world-leading vaccination programme has begun to “instil confidence in the market”, which saw average property values rising 0.7 per cent in the first quarter of 2021, the strongest growth since the summer of 2016, Faisal Durrani, head of Middle East research at Knight Frank, said.
The luxury rental market in Dubai, however, has remained stable with rents in the top segment declining only 0.5 per cent year on year at the end of the first quarter.
“Luxury rents [however,] grew by 1.8 per cent during March 2021, the first increase in 12 months and the strongest rate of growth since October 2013, suggesting the window for securing luxury bargains may be on the cusp of reversing,” Mr Durrani said.
Globally, rental market for luxury apartments have taken a bigger hit.
Rents in prime central London and Manhattan both fell 14 per cent in 12 months to February 2021. However, the tide is now turning, with the rate of rental declines slowing and new lease signings recovering in both markets.
“Motivated by large discounts, prime tenants are making their move back into some city centres, hopeful of shorter commutes post the pandemic,” according to the report.