There has been a softening of rental growth in prime areas of some of the world’s major cities, including Asia, while longer-term trends shows rents have fallen sharply in Hong Kong and Moscow.

There has been a softening of rental growth in prime areas of some of the world’s major cities, including Asia, while longer-term trends shows rents have fallen sharply in Hong Kong and Moscow.

The Knight Frank Prime Global Rental Index for the second quarter of this year (figures to the end of June) shows it rose by 2.2 per cent in the year to June 2014, down from 4.7 per cent in March.

A longer term trend – starting with the collapse of Lehman Brothers in the third quarter of 2008 – shows a massive divergence in the fortunes of some cities. Prime rents have surged by 22.9 per cent in London; they rose 15.4 per cent in New York; but fell 2 per cent in Singapore, and fell sharply in Hong Kong – 14.4 per cent and fell 14.9 per cent in Moscow. (Recent data from Singapore and Hong Kong suggests efforts by authorities to curb hot property market trends have had some impact.)

Nearer-term, the data points to some softening of trends, while some cities remain robust in their trends, Knight Frank said.

“Of the 17 cities tracked, nine saw flat or rising prime rents in the year to June,” Kate Everett-Allen, partner, International Residential Research at the firm, said of the figures.

Despite occupying the top two rankings, Dubai and Nairobi saw the rate of prime rental growth soften in the second quarter. On the other hand, although London, Singapore and Hong Kong saw prime rents decline in the year to June, the rate of decline is slowing.

The gap between the strongest and weakest performing cities over the last 12 months shrank from 32 percentage points in March to 19 points in June suggesting the performance of the world’s top luxury rental markets is converging.

 As economic conditions in the world’s top financial centres improve, Knight Frank said, prime rental demand is likely to accelerate due in part to the upturn in corporate relocations. Prime rents in London began their recovery at the start of the year and recorded monthly growth of 0.9 per cent in June, a three-year record.

In Hong Kong, rental demand for luxury homes picked up towards the end of the second quarter as expatriate families sought homes prior to the start of the new school year.