London and Hong Kong experienced the sharpest falls in luxury rents in 2013 with a 2.3 per cent decline in both cities, according to the Knight Frank prime global rental index.
The index measures prime rent performances across 17 cities worldwide, chosen due to their position as the top centres for corporate relocation around the globe. London and HK were the only two cities out of the 17 to experience falls in their respective markets in the 12 months to December 2013.
Despite the fall in London’s prime rents last year, the index shows that the city has seen the strongest growth across all 17 cities in the six years since the fall of Lehman Brothers.
London rents have risen 20.9 per cent since September 2008, compared with a 19.6 per cent rise in New York and 14.9 increase in Toronto.
Prime global rents rose by 4.8 per cent in 2013 compared with 5.1 per cent a year earlier.
Nairobi achieved the highest rate of annual growth for the third successive quarter with a 26 per cent rise between December 2012 and 2013.
Dubai placed second in terms of annual growth, with rents increasing by 14 per cent in 2013.
Knight Frank international residential researcher Kate Everett-Allen says: “The contrasting fortunes of London and New York’s financial sectors explains their differing results. Manhattan saw luxury rents increase by 3.5 per cent in 2013 at a time when Wall Street bonuses rose by 15 per cent year-on-year.
“By comparison, the number of people employed in London’s financial services is estimated to have contracted slightly in 2013 and prime rents declined by 2.3 per cent.”