Singapore, Lisbon and Berlin: cities with highest increase in rents first half of 2023

The prime residential rents grew by 2.6% across the 30 cities during the first six months of 2023.

The report reveals that average prime rents continued to show strong performance in 2023, surpassing growth in prime capital values. Lisbon, Singapore and Berlin saw the greatest increases in rents during the six months to June 2023 with Lisbon and Singapore also seeing the highest growth year-on-year.

The prime rental growth based on the half year comparison: Singapore saw a 13.6% growth just behind Lisbon at 13.9% with Berlin following at 9.2%. On a year-to-year basis, Singapore’s rental growth is 32.3%.

Alan Cheong, Executive Director, Savills Research & Consultancy: “Although rents in Singapore have risen 13.6% in the first half of 2023, the market in July is in a consolidation phase. The rapid climb up in rents was something unsustainable and was attributable to the delays in completion of units due to the pandemic measures. However, with close to 18,000 private residential units coming online this full year, and the weight of a slowing economy, we believe that some form of mild correction is expected in H2/2023. Be that as it may, we believe that for the full year, prime luxury rents are still expected to rise about 15% YoY with the increase front loaded to H1/2023.”

The average gross prime yield across the 30 markets held steady at approximately 3.0% for the first half of the year. Dubai, Los Angeles and New York remain the highest yielding cities at just below 5%.

Please see Savills prime residential world cities index – ranked by half year prime rental growth table here.

Lisbon and Singapore’s rental markets have witnessed significant levels of price growth over the past 18 months, with rents increasing by over 40% as an influx of international tenants drove demand for prime residences. Berlin’s prime rents, meanwhile, increased by 9.2% in H1 2023, largely attributed to the rising demand from wealthy domestic individuals.

In Asia Pacific, Kuala Lumpur (up 4.3%) and Bangkok’s (up 4.2%) rental markets are regaining momentum not seen since before the pandemic. Hong Kong is also experiencing a surge in residential leasing demand following the easing of all Covid-19 restrictions at the end of 2022, and Tokyo is benefitting from a movement back to the city, with average prime rents rising there by 1.7% in the first half of 2023.

Paul Tostevin, head of Savills World Research: “Looking ahead, we expect rents to continue to outperform capital values for the remainder of 2023 and in the medium-term, as supply continues to remain scarce in the face of growing demand, with positive rental growth in the majority of cities in the Index for the remainder of 2023.”

“Supply is expected to remain tight in many world cities. Several factors, including rising construction costs, development challenges, and increasing debt costs, contribute to the limited availability of prime inventory and the upward pressure on rental prices.”

Read the full report here.