LUXURY RENTALS IN DUBAI ‘OFFER MORE VALUE FOR MONEY’
▶ Hong Kong the most expensive city to rent prime property, report shows
Hong Kong is the most expensive city to rent a prime property on a monthly budget of $10,000, according to a Knight Frank study that said Dubai and Madrid offered bigger apartments with more value for money.
Despite Covid-19 headwinds and political uncertainty, prime rents in Hong Kong averaged $0.62 per square metre at the end of 2020, allowing a tenant with a budget of $10,000 a month to rent units that are under 140 square metres, the property consultancy said in a research note yesterday.
The global comparison is based on a three-bedroom apartment in a central location. However, detached homes in some cities can achieve even higher premiums.
Earlier this year, a house in Hong Kong was rented out for $174,000 a month or more than $2 million a year.
The global prime rental market took a hit amid the pandemic, which tipped the world economy into its worst recession since the 1930s and led to widespread movement restrictions.
Corporate tenants and international students – two important sources of demand for prime rental properties in first-tier cities – were among the first to temporarily relocate back to their countries.
The resulting additional supply mounted pressure on landlords to reduce rents.
Although prime rents in terms of square metres have softened in New York since the onset of the pandemic, the city is still the second most expensive market globally.
A $10,000 monthly budget provides only 209 square metres on average in a prime location in New York.
Singapore is in third place, followed by London and Sydney, with tenants securing between 232 metres and 279 square metres of space for the same amount, according to the report.
Of the eight key global cities tracked by the study, Dubai – the commercial and trading centre of the Middle East – and Spanish capital Madrid offered the largest space at 446 square metres and 465 square metres, respectively.
Dubai’s property market, which softened amid oversupply concerns and a coronavirus-induced economic slowdown, is bouncing back this year.
Concerted efforts by the government to stimulate economic activity and its world-leading vaccination programme have begun to “instil confidence in the market”, said Faisal Durrani, head of Middle East research at Knight Frank.
Average property values in the emirate rose by 0.7 per cent in the first quarter, the strongest growth since the summer of 2016.
However, the luxury rental market in Dubai has remained stable, with rents in the top segment declining by only 0.5 per cent from a year ago at the end of the first quarter.
“Luxury rents grew by 1.8 per cent during March 2021, the first increase in 12 months and the strongest rate of growth since October 2013, suggesting the window for securing luxury bargains may be on the cusp of reversing,” said Mr Durrani.
Globally, the rental market for luxury apartments has taken a bigger hit.
Rents in prime central London and Manhattan both fell by 14 per cent in the 12 months to February. However, the tide has begun to turn, with the rate of rental declines slowing and new lease signings 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,” the report said.