Knight Frank’s Prime Global Rental Index Q1 2024, which provides a quarterly snapshot of trends in  luxury lettings markets across 15 key world city markets, found Sydney saw a 17.3% rise in prime  rents over the 12 months to the end of Q1. 

It was followed by Auckland and London, in second and third place respectively, both with growth of 5.6%. 

Sydney also saw the strongest quarterly growth at 4.5% for Q1 2024, followed by Tokyo at 3.6% and New York at 3.1%.

Despite the strong growth for Sydney, Knight Frank’s Prime Global Rental Index Q1 2024 found there  was a continued slowing in annual rental growth over the first quarter of 2024. 

Average annual rental growth across the 15 cities tracked stood at 3.7% in the 12 months to March  2024, down from 5.3% growth seen in the final quarter of 2023, and from the high of 12.4% in Q1  2022.

The last time rents were rising this slowly was back in Q2 2021. 

The latest slowdown means rental growth has slipped below its long-term trend rate of 3.8%. 

Over the past 12 months 80% of the markets tracked saw prime rents rise, but 20% saw rents fall.  This contrasts with Q3 2023, when no markets were experiencing annual rental declines. 

While annual rental growth has slowed, quarterly growth has picked up, standing at 0.7%, up from -0.6% in Q4 2023. 

This slowdown in rental performance comes after nearly three years of surging rents following the pandemic. Rents across the 15 cities tracked by Knight Frank rose by an average of 26% between Q1 2021 and Q3 2024, before effectively flatlining since then. 

Knight Frank Chief Economist Ben Burston said demographic pressures from strong inward migration in Sydney were helping to underpin rental growth across price bands, including the prime market segment. 

“The sharp upward trajectory of prime rents in Sydney stands out in comparison to other global cities,”  he said. 

“While the economy is sluggish and disposable incomes are under pressure, the acute lack of  availability continues to drive rents upward. 

“In many markets evidence points to a rebalancing between supply and demand, but with tenant requirements still far outpacing stock availability, 80% of the markets tracked by Knight Frank’s Prime Global Rental Index are still seeing positive annual rental growth, with Sydney leading the pack.” 

Despite the recent slowing in rental growth, Knight Frank believes rents will continue to rise in the majority of major markets in 2024, with the potential for above trend growth to resume later in the year. 

Liam Bailey, global head of research at Knight Frank said: “We expect rental growth to resume its upward trajectory later in the year, driven by sustained demand in key global cities. The rebalancing  between supply and demand will be crucial in shaping the rental landscape moving forward.” 

Click here to read report Knight Frank Global Cities Index Q1 2024:

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