According to the latest data from Knight Frank, prime rental growth across 16 key cities slowed in the final quarter of 2024, with rents rising by 2.2% over the past year — the slowest pace in more than three years.
Knight Frank’s Prime Global Rental Index (PGRI) recorded annual growth of 2.2%, marking its lowest rate since mid-2021. This decline follows a steady drop from a peak of 11.4% in Q1 2022, now falling below the long-term average of 3.7%.
A post-pandemic price surge had driven prime city rents up by 28% since late 2020, with markets such as London and New York experiencing gains exceeding 50%. Robust wage growth and limited new-build supply were key drivers of this increase. However, the recent slowdown indicates a reversal of these factors in certain markets.
Quarterly growth in the PGRI stood at 0.3% in Q4 2024, slightly above the previous quarter’s 0.1% but still well below the long-term average of 0.9%.
Tokyo led the pack with an annual rental growth of 6%, driven by strong demand and limited supply. Zurich and Melbourne also ranked among the top three cities for rental growth.
Conversely, Toronto, Auckland, and Singapore experienced rental declines throughout 2024. Auckland recorded modest growth of 9.6% since early 2021, whereas Singapore and Toronto saw significant gains of 40.1% and 28.9%, respectively, before the recent downturn.
On a quarterly basis, Tokyo, Zurich, Monaco, and Hong Kong posted strong growth of 2% or more. Meanwhile, four other markets reported declines over the same period.
Although rents continue to grow in nominal terms, inflation-adjusted figures show that rental growth stalled at 0% in Q4. Elevated inflation has pushed real rents into negative territory in several markets, including Singapore, Auckland, and Toronto.
With global inflation expected to moderate and strong demand persisting amid supply constraints in key markets, the current period of negative real growth is likely to be short-lived.
Liam Bailey, Knight Frank’s global head of research says, “The upward repricing of prime global residential rents has worked its way through the system in most major markets. With wage growth slowing and affordability stretched, we expect rental growth to remain positive but to sit below trend this year. Over the longer term, we are likely to see a return to stronger growth as demand requirements continue to outpace the supply response.”
