Tokyo saw an 11% rise in luxury rents over the 12 months to the end of Q2, according to Knight Frank’s Prime Global Rental Index (PGRI) Q2 2024, with first-placed Sydney’s 13.9% almost 3% higher, and third-placed Berlin at 6.9%.
The PGRI provides quarterly trends in luxury lettings in 15 major markets, showing Sydney leading 15 key markets around the globe for the second time.
Knight Frank Australia Chief Economist Ben Burston said: “The Sydney rental market has tightened significantly due to strong immigration over the past two years, which surged after Covid restrictions were eased, and has yet to be significantly offset by the delivery of new supply.
Average annual rental growth across the 15 cities was 3.5%, the same level as Q2 2024, halting a decline that started in early 2022. Some 80% of markets saw rents rise annually except Hong Kong, Toronto and Singapore, which reported “healthy” new supplies.
“However, the pace of growth is now easing, with Sydney’s quarterly growth rate falling from 4.5% in Q1 to 0.9% in Q2, indicating that affordability is becoming a constraint on the rental surge, while the rental market has also benefited from a rise in listings in recent months.
“While growth has slowed, upward pressure on rents is likely to persist until investor demand for new apartments is strong enough to drive a substantial injection of new supply.”
Since Q1 2021, prime rents in Sydney have risen by 40.9%, behind New York (57.1%), London (56.5%), Miami (45.8%) and Singapore (41.4%).
Rachel Keeley, Senior Portfolio Manager at McGrath, Knight Frank’s partner in Australia, said: “The demand for luxury rentals in Sydney is steady, driven by a combination of limited supply and a growing appetite for high-end living spaces. Properties in prime locations such as Barangaroo and the CBD are particularly sought after.
“We’ve recently seen great success in Barangaroo, a testament to this trend. Barangaroo has become a hotspot for luxury rentals, attracting tenants who are looking for top-tier amenities and a vibrant lifestyle. The area’s exclusivity and the quality of developments have positioned it as a premium choice for discerning renters.”
Founded in 1896, Knight Frank is headquartered in London and operates in more than 50 territories, with 600 Offices and 20,000 staff.
