Expats are reporting that a shortage in rental apartments in Cape Town has meant that accommodation in the city is becoming more expensive. This is also the case in Zurich claims a global property rental index.
Both Cape Town and Zurich are home to some of the more expensive rental apartments in the world states the survey released by real estate giant Knight Frank, but the South African exchange rate still makes even the most expensive apartment affordable for the expat. Cape Town and Zurich have experienced rent hikes of 10.2% and 8.3% respectively while Knight Frank’s overall prime rental index has risen by only 0.2% in the past year, but this figure hides considerable variations depending on location.
The company’s statistics reveal that on a regional basis, Africa and Europe recorded the strongest rise in prime rents while in Moscow prime rents are 11% lower year on year in the second quarter of 2015. The index report also says that restrictions on foreign buyers in Zurich and Hong Kong are propping up rental demand. Despite the index’s muted growth, 10 of the 18 cities tracked by the index saw rents rise during the 12 months to June 2015.
Cape Town leads the rankings with prime rents ending the year to June 10.2% higher. A shortage of rental stock coupled with the introduction of tighter credit regulations has led to a spike in demand as potential home buyers find themselves having to look for rental accommodation instead remarked Kate Everett-Allen, a partner in Knight Frank’s residential research team.
“Although sales markets in cities such as Singapore, London and Nairobi are pausing for breath, in most cases due to policy intervention be it via taxes or mortgage regulation, the commonly held perception that prime rental markets will, in contrast, start to accelerate isn’t holding true,” said Everett-Allen.
“Instead, the performance of our Prime Global Rental Index closely mirrors global GDP and with sluggish growth considered the new normal the heady days of 5% annual growth look unlikely to be repeated for some time.”
She explained that this is good news for high end residential tenants, in particular those relocating to the United States where the strong dollar could be mitigated by slower rental growth.
This trend is impacted by the fact that some industry role players are preparing for a 45% increase of global multinationals expected to commit to international assignments. This figure rises to 54% amongst those with headquarters in the US.
“A stronger dollar means US companies are expanding once again, to some extent filling the void left by the retraction of emerging markets in recent years,” Everett-Allen said.
Source: Expat Forum