LONDON – Following the Covid-19 real estate frenzy, which pushed rent and home prices higher, there are some signs that things are cooling off for luxury rentals.

Prime residential rents, defined as the top 5 per cent of the market, rose 7.9 per cent year over year on average in the 12 months till September, according to real estate company Knight Frank, which tracks 10 global cities.

Luxury rents in some of world’s biggest cities were pushed higher by limited supply, frustrated house hunters and residents who were returning after the pandemic.

In Singapore, rents for luxury condominiums were up 14.5 per cent compared with the previous year, while the gain was 11.2 per cent in London. Sydney posted the biggest gain, as prices jumped 18.3 per cent amid housing construction constraints.

In the third quarter of 2023, however, rent on prime properties in New York and Singapore respectively dropped 1.3 per cent and 1.7 per cent, according to Knight Frank.

The company said it sees the rate of increases slowing globally in the coming months as well, as tenants reach their affordability limits.

“There comes a point when, even in markets with very strong demand and weak supply, tenants are unable to keep bidding rents substantially higher,” said Knight Frank’s global head of research Liam Bailey. BLOOMBERG