In the first half of 2023, the real estate markets in Singapore and Lisbon experienced a remarkable surge in prime residential rents, making these cities stand out as top performers. According to research by Savills, a leading real estate services company, both Singapore and Lisbon witnessed substantial increases in prime rents, surpassing other global cities. This article will delve into the key factors driving the surge in rents in these cities and shed light on the overall trend in the Asian rental markets.
Singapore’s Prime Rents Hike
Singapore recorded an impressive 13.6% growth in prime residential rents from December 2022 to June 2023. This surge was attributed to construction delays during the Covid-19 pandemic, which created a temporary scarcity of available properties. However, the market is now entering a consolidation phase, and close to 18,000 private residential units are expected to be completed this year, leading to a mild correction in prices. Despite this, Alan Cheong, Executive Director at Savills Research and Consultancy, predicts that prime luxury rents in Singapore could still rise by approximately 15% year-on-year, with the increase front-loaded in the first half of 2023 [1].
Lisbon’s Astonishing Rent Surge
Lisbon took the lead with an astounding 13.9% surge in prime rents during the same period. The Portuguese capital, along with Singapore, experienced high levels of price growth over the past 18 months, with rents increasing by over 40%. This impressive growth was mainly driven by a surge in demand for prime homes from international tenants. The city’s cosmopolitan charm and attractive lifestyle have made it a sought-after destination for global residents, contributing to the surge in rents [1][3].
Berlin’s Prime Rents Growth
Berlin followed closely with a commendable 9.2% increase in prime rents during the same period. Unlike Singapore and Lisbon, Berlin’s growth was fueled by an influx of affluent domestic residents, seeking high-end living spaces. This rise in demand from wealthy individuals contributed to the upward trend in prime rents, making Berlin one of the top-performing cities in terms of rent growth [1][4].
Asian Cities with Prime Rents Hikes
Asia-Pacific region has shown remarkable growth in prime rents, with 11 out of the 30 cities with the highest surge in prime rents belonging to this region. Apart from Singapore and Lisbon, Kuala Lumpur secured the fifth spot with a substantial 4.3% increase in prime rentals from December 2022 to June 2023, followed closely by Bangkok with a 4.2% surge. Hong Kong ranked twelfth with a 2.7% rise, while Tokyo exhibited a 1.7% increase in prices. Kuala Lumpur and Bangkok’s rental markets are regaining momentum, signaling a positive recovery since the pandemic’s impact on the real estate sector. Hong Kong’s surge in prime rents can be attributed to an increase in leasing demand after the removal of Covid-19 restrictions at the end of 2022. Additionally, Tokyo is experiencing growth as people move back to the city, contributing to an increased demand for prime residential properties [1][5].
Outlook for Rental Markets
Looking ahead, Savills expects rents to continue outperforming capital values for the remainder of 2023 and the medium-term. Tight supply conditions in many cities, coupled with growing demand, will likely contribute to positive rental growth. Challenges such as high construction costs, development constraints, and rising debt costs may further limit the supply of prime residential homes. As a result, rental markets are expected to remain robust, offering attractive investment opportunities for property owners and investors alike [1].
Conclusion
Singapore and Lisbon have emerged as the frontrunners in the surge of prime rents among cities in the first half of 2023. Both cities experienced remarkable growth, fueled by factors such as construction delays, influx of affluent residents, and increased demand from international tenants. The Asian region has also shown strong performance in rental markets, with Kuala Lumpur and Bangkok regaining momentum after the pandemic’s impact. As the supply of prime residential properties remains tight, rental markets are expected to continue outperforming capital values in the coming months, offering attractive prospects for property investors and tenants alike.
References
- Savills – Singapore, Lisbon, and Berlin: cities with the highest increase in rents first half of 2023
- CNBC – These countries saw the highest hike in prime rents for H1 2023
- [Bloomberg – Singapore, Lisbon Top Global Rental Growth as Foreigners Flock](https://www.bloomberg.com/news/articles/2023-07-20/singapore-lisbon-top-global-rental
