The cost of renting a luxury apartment in Dubai is less than a third that in Hong Kong which has retained its crown as the world’s most expensive city, according to new research.
Latest Knight Frank global property rents research showed that despite the pandemic and political headwinds, prime rents in Hong Kong averaged $6.70 per sq ft at the end of 2020.
This means a tenant with a budget of $10,000 per month would be able to rent less than 1,500 sq ft.
By comparison, Knight Frank said that out of the eight key global cities tracked, Dubai offered one of the largest spaces in return for rent of $10,000 per month – 4,800 sq ft.
Only Madrid offered more space with 5,000 sq ft. The global comparisons are based on a three-bedroom apartment in a central location.
Although prime rents have softened since the start of the pandemic, New York was named the second most expensive market, with $10,000 a month providing 2,250 sq ft on average.
Next come Singapore, London and Sydney which occupy the mid-rankings with $10,000 securing between 2,500 and 3,000 sq ft for rent, followed by Dubai and Madrid.
Faisal Durrani (pictured below), head of Middle East Research at Knight Frank, said: “Dubai’s property market has remained subdued for a number of years, with the pandemic exacerbating conditions. However, concerted efforts by the government to stimulate economic activity and deliver one of the world’s leading vaccination roll out programmes has begun to instil confidence in the market, with average property values rising by 0.7 percent during Q1, the strongest rate of growth since the summer of 2016.
“The impact of the economic stimulus measures has been slower to filter through to the luxury rental market, with rents in this top-tier segment of the market declining by 0.5 percent during Q1.”
He added: “It is worth noting however that luxury rents grew by 1.8 percent during March, the first increase in 12 months and the strongest rate of growth since October 2013, suggesting that the window for securing luxury ‘bargains’ may be on the cusp of reversing.”
When the pandemic first hit in 2020, corporate tenants and international students – two key sources of demand for global prime rental properties in first tier cities – were among the first to head home or relocate temporarily.
The resulting uptick in supply put pressure on rents and saw landlords forced to change their strategy to avoid lengthy void periods, Knight Frank said.
Rents in prime central London and Manhattan both fell 14 percent in the year to February but the tide is definitely turning, it added.
The rate of rental declines is slowing and new lease signings are recovering in both markets. Motivated by large discounts, prime tenants are making their move back into some city centres hopeful of shorter commutes post the pandemic, its report noted.
While domestic demand looks to be strengthening in some cities, the easing of travel restrictions will be the key determinant for the recovery of prime rental markets globally.
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