Top financial cities at bottom of rental rankings

Nairobi has enjoyed the world’s strongest rental growth for four quarters in a row Photo: DEMOSH

Prime rents in the Kenyan capital increased by almost 26 per cent in the year to March, according to Knight Frank’s annual prime residential rental rankings, far outperforming traditional markets such as London and Hong Kong.

The top financial centres actually saw rents fall by 2 per cent 6.3 per cent respectively, alongside Singapore’s fall of 0.3 per cent.

“However,” notes Knight Frank, “we expect prime rental growth in these key cities to strengthen over the remainder of 2014.”

Indeed, in London, the rental recovery looks to be taking hold as price growth starts to slow, while new registrations are up 17 per cent year-on-year thanks a diverse range of industries fuelling demand, from oil and gas to mining and IT.

The UK’s imminent rise of interest rates is also likely to help, pushing up mortgage costs and, as a result, boosting demand for rental property.

In Hong Kong, although there has been a relaxation of the Double Stamp Duty rule, a number of stringent cooling measures remain in place. With foreign buyers facing purchase costs of 25 per cent of the sales price, the luxury rental market is attracting those deterred from buying, which should help support future rental growth.

Nairobi, though, remains top of Knight Frank’s prime rental growth index for the fourth quarter in a row. Nonetheless, there are signs the market is cooling with growth of only 2.1 per cent recorded in the first three months of 2014.

For the full rankings, see the report here .