Private apartments are seen against the backdrop of the Marina Bay Sands hotel and the Singapore Flyer observatory wheel in Singapore on March 23, 2022.
Roslan Rahman | AFP | Getty Images
Rents in prime residential areas experienced significant increases in Singapore, Lisbon, and Berlin during the first half of the year, according to a research report by Savills, a real estate services company.
Data from Savills revealed that prime rents in Lisbon witnessed the highest surge of 13.9% from December 2022 to June 2023. Singapore followed closely with a 13.6% increase, while Berlin saw a growth of 9.2% in the same period.
Savills stated that Lisbon and Singapore’s rental markets have witnessed substantial price growth of over 40% in the past 18 months. This surge in rents can be attributed to increased demand from international tenants seeking prime housing options.
The rise in Berlin’s prime rents, on the other hand, can be attributed to an influx of affluent residents.
In the case of Singapore, the significant surge in prime rents was due to construction delays caused by the Covid-19 pandemic. However, with the completion of 18,000 private residential units this year, a mild correction in prices is expected. Alan Cheong, executive director at Savills Research and Consultancy, anticipates a year-on-year increase of approximately 15% in prime luxury rents in Singapore, with the majority of the increase concentrated in the first half of 2023.
Prime rent hikes in Asia
According to Savills’ research, the Asia-Pacific region witnessed prime rent increases in 11 out of the 30 cities analyzed.
Singapore topped the list, followed by Kuala Lumpur with a rental growth of 4.3% from December 2022 to June 2023, and Bangkok with a 4.2% increase.
Hong Kong ranked twelfth with a 2.7% rise, while Tokyo was five positions lower with a 1.7% price increase.
Residential building in the Kachidoki area in Tokyo, Japan, on Saturday, Feb. 11, 2023.
Kosuke Okahara | Bloomberg | Getty Images
The rental markets in Kuala Lumpur and Bangkok are currently regaining momentum similar to pre-pandemic levels, according to the report. Hong Kong’s surge in prime rents can be attributed to increased leasing demand after the removal of Covid-19 restrictions at the end of 2022. Tokyo is benefiting from a return of people to the city.
Savills expects the supply of prime residential homes to remain limited in many cities due to high construction costs, development challenges, and rising debt costs. Paul Tostevin, head of Savills World Research, stated that rents are expected to continue outperforming capital values for the rest of 2023 and the medium-term, with positive rental growth anticipated in the majority of cities analyzed.
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