New Yorkers should be shouting with glee: We’re number 15!
At least we’re ranked 15th, according to Knight Frank’s latest report on rising global rents. According to the UK-based property consultancy, New York placed 15th on its just-released list of residential rent increases for key cities worldwide.
What that means is that after years of steady increases and record rents, New York tenants can breathe a bit — but just a bit! — easier. Prices for the city’s top-end rental buildings are actually down — decreasing some 2.9 percent during the second quarter of this year. That’s just a tad shy of the stats for London, where prime rental properties (the top 5 percent of the market) fell by 3 per cent during the same period.
New York and London actually stand in contrast to the report’s general finding of rental trends worldwide. The global market hit a three-year high earlier this year, the company found, with average rents rising 2.3 percent — making it the strongest quarter since 2010.
Why did New York lag behind?
According Jonathan Miller, of Miller Samuel, which provided the New York data for the report, the city saw a record number of apartment sales this summer. “This frenzy of sales volume sapped some of the rental demand,” he says. “In fact, we had more sales in the third quarter since 2007. It’s the second most sales for a quarter in the 24 years I’ve been tracking the market.”
Across the Atlantic, London’s price decline is tied more to its sagging financial sector than to surging housing deals. “In London’s case, the prime property market has been tied to the [its] financial district, which has been through a tough period for the past year or two,” says Kate Everett-Allen, an associate with the international research team for Knight Frank London.
But this doesn’t mean NYC rents are suddenly going to drop to 2009 levels. “I think now the direction is sideways,” says Miller. “I don’t think we’re going to see rents drift downward. The pace of growth is cooling, but I don’t think this signifies a new era of improved rental affordability in the city.”
Meanwhile, sitting atop the list are Dubai (#2), and Nairobi (#1) — where prime rental prices surged some 24 per cent this year.
Why the Kenyan capital? “In the emerging markets, we are seeing a rising demand from corporate tenants,” explains Everett-Allen. “Companies are now willing to pay increased housing costs as these markets show continued recovery from the financial crisis of five years ago. We are definitely seeing an outflow of talent from West to East of multinational corporations.”