According to Knight Frank's Prime Global Rental Index, global rental growth will increase by 300% from pre-pandemic rates in 2023. This prediction raises questions and interest in what is happening in the global rental market.

Rental growth rates around the world

According to Knight Frank, global rental values rose 7.5% year over year. This is a significant increase, although it is down slightly from the higher rates in the first quarter.

However, the most striking comparison is with pre-pandemic times, when the average annual increase was just 2.2%. Thus, current rent growth is nearly three times the pre-pandemic average.

Factors affecting rental price growth

Some of the key factors influencing rental price growth are high demand and the limited availability of housing. Demand has increased as residents of many cities have returned to urban life after the lockdown period. At the same time, mortgage rates have increased and the construction of new residential projects has slowed. All this led to a lack of supply on the market.

Buying a home in the United States has become a luxury. The average monthly mortgage payment exceeds $2000

Cities with the most significant growth in rental rates

In individual cities, rent growth was even more impressive. In New York, Singapore, and London, rents have risen 56%, 53%, and 51%, respectively, since Q1 2021. These figures suggest that some metropolitan areas are experiencing a rental boom.

Recently, we also wrote about the rapid growth of rental rates in Barcelona.

Experts are actively discussing possible solutions to the problems in the rental market. For example, in New York, they consider the conversion of office premises, especially old ones, into residential ones. However, the cost of construction materials and labor may become serious obstacles to the implementation of such projects.