The global real estate consultancy and agency sees demand for more short-term accommodation on the rise in the "global cities" and puts Indian cities among the leaders in its predictions of prime rental yields - with Hong Kong coming at the bottom.

A demand for flexibility in line with changing work patterns is pushing up appetite for short-term rental accommodation in such “global cities” as New York, Hong Kong and London, with this market segment becoming more dominant from now to 2017, according to Knight Frank.

In the firm’s Global Cities: The 2016 Report, it states that short-term assignments are forecast to grow to over a fifth of all international relocations in the three years to 2017. Meanwhile, long-term assignments are expected to fall from 52 per cent to 45 per cent over the same period.  

However, supply of short-term rental accommodation is struggling to meet demand in many established markets and the situation is compounded by the fact that short-term lets often fall into a legal grey area, Knight Frank said.  

The report maps the annual percentage change to the first quarter of 2015 of rental growth by prime "sub-market" in London and New York. Sub-markets in both cities have seen a “significant” increase in rental values with New York’s East Village leading the way with growth of 26.5 per cent, followed by West Village – Meatpacking District (18.3 per cent) and Tribeca (17.8 per cent). In London, meanwhile, prices in St John’s Wood have increased by 11 per cent, followed by Marylebone (8.8 per cent) and Hyde Park (8.5 per cent). 

As far as serviced apartments are concerned, worldwide, their number has grown by 80 per cent since 2008 to over 750,000. Knight Frank said the trend will continue with the number of apartments increasing by as much as 18.2 per cent between 2014 and 2015. The US accounts for 61 per cent of the world’s serviced apartment locations, followed by Europe (17 per cent), Australasia (11 per cent) and Asia (5.5 per cent). 

Elsewhere in the report, Knight Frank identifies trends such as “flexible offices”. “These operate like tech incubators, where independent entrepreneurs work side by side in a communal office,” the firm says. 

“Many occupiers increasingly view offices as an effective means of controlling the bigger and more damaging business cost of staff attrition. Whereas in the past an office relocation was largely managed by the finance director, increasingly the chief executive and the head of human resources are showing an interest, now that staff retention is featuring within the decision-making process,” it said. 

Knight Frank gives a range of prime yield predictions for the end of 2015, with Bengaluru (India) at the top at 10.5 per cent, ahead of India’s Mumbai, at 10 per cent, and Dehli, at 9.5 per cent. Mexico City is at 7 per cent, followed by Beijing at 6.3 per cent. Shanghai is also at 6.3 per cent, while Melbourne is 5.9 per cent and Sydney at 5.7 per cent.

The highest North American city for prime yield growth is Chicago, predicted at 5.4 per cent, with Washington DC at 5 per cent, and Los Angeles at 4.9 per cent. The highest European city is Frankfurt, at 4.5 per cent, followed by London, at 4 per cent. New York City is also at 4 per cent, while Singapore and Tokyo are level-pegging at 3.7 per cent. Behind these, Paris is at 3.5 per cent and Hong Kong at 2.9 per cent.