Lisbon's Luxury Rental Market on the Rise
According to the latest Savills report, the "Prime Residential World Cities index", luxury residential rental prices have continued to outpace capital values, growing by 2.2% in the first half of the year. Among the 30 global markets analyzed, Dubai (12.1%), Bangkok (9%), and Lisbon (7.5%) topped the list for rental growth.
Factors Driving Growth
The increasing demand, particularly from foreigners, alongside a scarcity of high-end properties available for rent, has contributed to the rising rental prices in Lisbon. Alexandra Portugal Gomes, head of Research at Savills, emphasizes that Lisbon is increasingly on the international radar due to its unique quality of life, suggesting that prime rental prices will likely continue to rise.
Market Comparisons
Kelcie Sellers, associate director at Savills World Research, notes that both Lisbon and Dubai are consistent leaders in their prime rental markets. The excess demand for high-quality rental properties is a significant factor in this trend. In the EMEA (Europe, Middle East, and Africa) region, demand continues to surpass supply for prime rentals, contributing to rising prices across the board. Notably, cities like Athens, Barcelona, Amsterdam, Berlin, and Cape Town have seen prime rental prices increase by over 3% in the first half of 2024.
Future Projections
Sellers believes that rental prices will continue to exceed capital values throughout 2024 and into the medium term due to ongoing scarcity in many cities worldwide. High-interest rates have led markets to act cautiously, pushing potential buyers toward the prime rental market. However, a potential decrease in interest rates later this year could encourage buyers to return to the sales market, easing price pressures.
Global Trends
In the United States, cities like Los Angeles and San Francisco have also reported prime rental price increases of over 4% in the first half of the year. New York City has seen rental prices rise by 3.6%. Meanwhile, Chinese markets have shown mixed results, with Beijing experiencing a 1.6% increase, while Shanghai saw a slight decline of 0.2%.
The Singapore rental market has faced a downturn, with demand in high-end neighborhoods slowing down, leading to a 4.5% decline in rental prices over the last six months.
Conclusion
In summary, the 30 global cities analyzed reported a 10 basis point increase in prime yields in 2023, now averaging 3.1%. Cities like Los Angeles, New York, and Dubai remain at the forefront with yields exceeding 5%.
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