Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
LUXURY RESIDENTIAL RENTS RISE FASTEST IN TORONTO Key luxury rental markets saw prime rents fall 0.4% in 2016 with supply proving the key determinant of rental market performance
RESIDENTIAL RESEARCH
PRIME GLOBAL RENTAL INDEX
TAIMUR KHAN Senior Research Analyst
“ Ten cities recorded rental growth over the course of 2016, up from seven in 2015.”
Follow Taimur at @TaimurKF
For the latest news, views and analysis on the world of prime property, visit our blog or follow @KFIntelligence
Prime rents across the 17 key cities tracked in Knight Frank’s Prime Global Rental Index fell marginally by 0.4% in 2016. This compares to 2.5% growth reported by the index two years ago.
While the general trend was for rental declines in 2016, there were areas of positive performance. Ten cities recorded rental growth over the course of 2016 up from seven in 2015. At the same time the difference between the strongest and weakest-performing markets increased to 14%, up from 12.5% in 2015.
Toronto leads our ranking with prime rents growing by 8% year-on-year. This rise comes despite a fall in the volume of tenancies agreed over the course of the year caused by a lack of supply in the condominium rental market. With luxury house prices in Toronto rising by 15.1% in 2016, buyers who may have been considering single-family homes are now turning their attention to the less-expensive condominium market which exacerbated the lack of supply further.
Nairobi remained the weakest-performing market for the fourth consecutive quarter with rental values falling by 6% in 2016. However, in the last quarter of 2016, prime rents were unchanged, suggesting declines may have started to bottom out. This trend is further supported by a steady increase in oil prices over the past few months.
Despite rental value declines in prime central London in 2016, latest activity data is pointing to an uptick in demand, which is beginning to counter-balance the effect of growing supply. The number of tenancies agreed in prime central London was 20% higher in the final quarter of 2016 compared to 2015. Meanwhile, there was a 12% year-on-year rise in new rental properties coming onto the market in the final quarter of 2016, a figure that was lower than the increase of 30% recorded over the first nine months of the year. We expect more positive rental performance in 2017.
North America continued to be the strongest performing world region for the fifth consecutive quarter with average annual prime rental growth of 5.2%. Europe displaced Africa as the weakest-performing region with prime rents falling 2.1% in 2016.
With increasingly active fiscal and monetary policies in the US, such as President Trump’s proposed US$1trillion infrastructure plan and tax cuts as well as the decision by the Federal Reserve to raise interest rates, we may see other central banks and governments follow suit to either support currency or to deal with any spill-over of inflation. Higher interest rates would negatively impact on market affordability, a process which could lead to an increase in the demand for rental accommodation, as prospective buyers opted to rent for a period.
Results for Q4 2016Average prime global rents fell marginally by 0.4% in 2016
North America saw prime rents increase by 5.2% on average
Europe displaced Africa as the weakest-performing region with prime rents falling 2.1% in 2016
Toronto leads the rankings with prime rents increasing by 8% on an annual basis
Nairobi occupies the bottom ranking with rents falling by 6% year-on-year
-1%
0%
1%
2%
3%
4%
5%
6%
Prime Global Rental Index Q4 2016 Annual performance over the last five years 12-month % change
201
5 Q
4
201
6 Q
2
201
6 Q
3
201
6 Q
4
201
6 Q
1
201
5 Q
3
201
5 Q
2
201
5 Q
1
201
4 Q
4
201
4 Q
3
201
4 Q
2
201
4 Q
1
201
3 Q
4
201
3 Q
3
201
3 Q
2
201
3 Q
1
201
2 Q
4
201
2 Q
3
201
2 Q
2
201
2 Q
1
201
1 Q
4
201
1 Q
3
FIGURE 1
PRIME GLOBAL RENTAL INDEX Q4 2016
Source: Knight Frank Research, Miller Samuel/Douglas Elliman, Ken Corporation
FIGURE 3
Proportion of cities by annual change in prime rents 12-month % change (Q4 2013-Q4 2016)
Source: Knight Frank Research, Miller Samuel/Douglas Elliman, Ken Corporation
FIGURE 4
Prime rents by world region Average annual % change to Q4 2016
-3
-2
-1
0
1
2
3
4
5
6
0.2%
AFR
ICA
-0.1%
AS
IA P
AC
IFIC
EU
RO
PE
-2.1%
2.4%
MID
DLE
EA
ST
5.2%
North America 4.4%Asia Paci�c 0.9%Middle East 0.7%Europe 0.3%Africa -3.9%
NO
RTH
A
MER
ICA
2013
Q4
2014
Q1
2014
Q2
2014
Q3
2014
Q4
2015
Q1
2015
Q2
2015
Q3
2015
Q4
2016
Q1
2016
Q2
2016
Q3
2016
Q4
0%25
%50
%75
%25
%50
%75
%10
0%10
0%
INC
REAS
ESI
GN
IFIC
ANTL
YIN
CRE
ASE
SLIG
HTL
YDE
CRE
ASE
SLIG
HTL
YDE
CRE
ASE
SIG
NIF
ICAN
TLY
Geneva
Shanghai
Singapore
New York*
Hong Kong
Guangzhou
Tokyo
Prime CentralLondon
2.4%
-0.1%
6.3%
1.0%1.4%
8.0%
0.0%
Taipei
Toronto
Beijing
Cape Town
Moscow
Zurich
Vienna
Tel Aviv
Nairobi3.9%
-3.3%
3.3%
2.4%
1.4%
-4.2%
-4.6%
-5.1%
-6.0%
-5.1%
Source: Knight Frank Research, Miller Samuel/Douglas Elliman, Ken Corporation
FIGURE 2
Prime Global Rental Index, Q4 2016 Annual % change
Tracking prime residential rents across 17 cities
Luxury prices across the 39 cities tracked by our index increased by 4% in 2016, however, it was a year of two halves. The first half of 2016 saw values jump 2.8% on average, the second half recorded only a 1.2% increase.
China’s main cities dominate the top tier of rankings. Shanghai, Beijing and Guangzhou all saw luxury prices accelerate by more than 26% in 2016. However, this is not a country-wide phenomenon. Smaller cities and rural areas are not seeing the same level of growth. Rising household wealth and a lack of supply is fuelling price growth but cooling measures introduced in the last quarter of 2016 are starting to have some effect.
The ranking side-by-side of Toronto (15%), Vancouver (15%), Sydney (9%) and Melbourne (9%) confirms both countries are witnessing similar market supports and constraints. Historically low interest rates, strong overseas interest and robust GDP growth are boosting values (in both countries) but steps taken in 2016 to cool price inflation on a state and city basis in both countries are reducing the rate of growth.
The world’s top financial hubs – London, New York and Hong Kong – are not seeing the capital appreciation they were five ago (figure 3).
London (-6%) is adjusting to a new tax burden following a 3% rise in stamp duty for additional properties. However, activity rose steadily in the second half of 2016, Knight Frank sales were higher in November 2016 than in the same month in 2014 and 2015.
Hong Kong, which recorded negative growth in 2015, drifted upwards in 2016, recording annual growth of 2.1%. The increase would be higher were it not for the increase in the double stamp duty rate to a standardised 15% in early November.
New York’s luxury sector faced notable headwinds in 2016. The strong US dollar negated some overseas interest and the delivery of a large number of luxury new projects helped inflate supply. But while volumes slowed, prices proved resilient. With President Trump expected to embark on a programme of fiscal stimulus, reduced regulation and infrastructure investment, there is potential for stronger growth in 2017.
Moscow (-11%) and Tokyo (-9%) occupy the index’s lowest rankings in 2016. Low oil prices and the rouble’s weakness account for Moscow’s decline, whilst the pace of growth in Tokyo has slowed considerably and inventory levels are on the rise.
Results for Q4 2016Shanghai, Beijing and Guangzhou occupy the top three rankings, each recording annual price growth in excess of 26% in 2016
The index increased by 4% in 2016, down from 4.9% in 2015
The world’s major financial hubs (London, New York and Hong Kong) are not seeing the rates of capital growth they were five years ago
Analysis by world region shows Australasia and North America are the key engines of luxury price growth globally
Moscow (-11%) and Tokyo (-9%) occupy the index’s lowest rankings in 2016
KATE EVERETT-ALLEN International Residential Research
“ 2016 was a year of two halves. The first half saw luxury prices jump 2.8% on average, the second half recorded only a 1.2% increase.”
Follow Kate at @keverettkf
For the latest news, views and analysis on the world of prime property, visit Global Briefing or @kfglobalbrief
SHANGHAI LEADS LUXURY RESIDENTIAL PRICE INDEXThe world’s luxury homes are recording a slower rate of growth but Chinese cities along with those in Australia and Canada continue to buck the trend.
RESIDENTIAL RESEARCH
PRIME GLOBAL CITIES INDEX
FIGURE 1
0%
1%
2%
3%
4%
5%
6%
7%
8%
201
2 Q
4
201
2 Q
3
201
2 Q
2
201
2 Q
1
201
3 Q
4
201
3 Q
3
201
3 Q
2
201
3 Q
1
201
4 Q
4
201
4 Q
3
201
4 Q
2
201
4 Q
1
201
5 Q
4
201
6 Q
4
201
6 Q
3
201
6 Q
2
201
6 Q
1
201
5 Q
3
201
5 Q
2
201
5 Q
1
Prime Global Cities Index Q4 2016 Annual performance over the last five years 12-month % change
Source: Knight Frank Research
Prime Global Cities Index - Q4 2016
RESIDENTIAL RESEARCH
Key Facts Chinese developers and investors purchased a total $2.4 billion worth of Australian residential development sites in 2016; 38% of total sales.
Residential development sites purchased by Chinese developers and investors, had an average area of 21,045 sq m in 2016; increasing more than 18 times from 2012.
In 2016, Australian development sites purchased by Chinese developers and investors averaged a potential 502 dwellings per development site.
MICHELLE CIESIELSKI Knight Frank Residential Research Follow Michelle at @MCiesielski_AU
Almost one-sixth of the world will observe the Chinese New Year starting 28 January 2017; the most important time in the Chinese calendar. As Chinese communities head into the Year of the Rooster, we reflect on the rise of Chinese residential developers in Australia. Gong Xi Fa Cai!
Chinese developers and investors purchased $2.4 billion worth of Australian residential development sites in 2016. This was 9.4% stronger than recorded in the prior year. This trend has been emerging over the past five years while the Australian residential market collectively strengthened throughout 2012 and in 2013, growth in sales turnover encouraged prices to rise for local developers and investors alike. At this time, the Australian dollar became very favourable against other currencies for investment into Australia. The Chinese renminbi was no exception. Opportunistic developers, many for the first time, considered Australia to build their next development after becoming a household name in homeland China. It was considered, and still is to some extent, worth the risk to build a first-time signature development (even if profitability resulted to be just break-even) to be accepted as a reputable developer, by the local Australian market. Despite overall total sales falling during
2016, and sales to Chinese developers and investors are still 11.2% lower than the market peak recorded in 2014, their influence has grown. In the past three years, Chinese developers and investors accounted for over 25% of disclosed total sales each year with 2016 recording a share of sales as high as 38%.
Source: Knight Frank Research
FIGURE 1
Australian Residential Development Sites Purchased by Chinese Developers and Investors % portion of disclosed total sales, by value
THE RISE OF CHINESE THE RISE OF CHINESE THE RISE OF CHINESE DEVELOPERS IN DEVELOPERS IN DEVELOPERS IN AUSTRALIAAUSTRALIAAUSTRALIA MARKET INSIGHT MARKET INSIGHT MARKET INSIGHT JANUARY 2017JANUARY 2017JANUARY 2017
Residential development site sales suitable for low, medium and high density; threshold of $2M+ for all states, with the exception of NSW & Victoria being $5M+.
2%
11%
27%
26%
38%
0% 20% 40% 60% 80% 100%
2012
2013
2014
2015
2016
CHINA LOCAL & OTHER COUNTRIES
The Rise of Chinese Developers in Australia - January 2017
DATA DIGEST
RECENT MARKET-LEADING RESEARCH PUBLICATIONS
Knight Frank Research Reports are available at KnightFrank.com/Research
RESIDENTIAL RESEARCH
Liam BaileyGlobal Head of Research +44 20 7861 [email protected]
Taimur KhanSenior Research Analyst+44 20 7861 [email protected]
PRESS OFFICE
Astrid Etchells+44 20 7861 [email protected]
The Knight Frank Prime Global Rental Index is an important resource for investors and developers looking to monitor and compare the performance of prime residential rents across key global cities. Prime property corresponds to the top 5% of the housing market in each city. The change in prime residential rents is measured in local currency. The index is compiled on a quarterly basis using data from Knight Frank’s network of global offices and research teams.
PRIME GLOBAL RENTAL INDEX Q4 2016
RESEARCH
PRICE PERFORMANCE DEMAND OUTLOOK
DUBAI INSIGHT 2017RESIDENTIAL OVERVIEW
RESEARCH
Dubai Insight Report - 2017
The Wealth Report - 2017
201711th Edition
The global perspective on prime property and investment
TH
E W
EA
LTH
RE
PO
RT
2017
Important Notice © Knight Frank LLP 2017 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.
For the latest news, views and analysison the world of prime property, visit
KnightFrank.com/blog
KNIGHT FRANKINTELLIGENCE
Knight Frank Prime Global Rental Index, Q4 2016 Ranked by annual % change
Rank Country 12-month % change
(Q4 2015-Q4 2016)
6-month % change
(Q2 2016-Q4 2016)
3-month % change
(Q3 2016-Q4 2016)
Market direction*
1 Toronto 8.0% 3.6% -0.2%
2 Cape Town 6.3% 4.8% 2.9%
3 Guangzhou 3.9% 2.8% 2.0%
4 Zurich 3.3% 3.3% 0.0%
5 Tel Aviv 2.4% 2.0% 0.9%
6 New York* 2.4% 0.3% -3.0%
7 Beijing 1.4% 1.0% -0.1%
8 Tokyo² 1.4% -2.0% -0.4%
9 Shanghai 1.0% 0.8% -0.3%
10 Taipei 0.0% 0.0% 0.0%
11 Vienna -0.1% -0.6% 1.6%
12 Singapore -3.3% -1.8% -0.4%
13 Moscow -4.2% -0.8% 0.2%
14 Geneva -4.6% -7.5% -3.1%
15 Hong Kong -5.1% -0.2% -0.2%
16 London¹ -5.1% -3.1% -1.6%
17 Nairobi -6.0% -1.7% 0.0%
Source: Knight Frank Research, Miller Samuel/Douglas Elliman, Ken Corporation 1 London: new data is available for prime central London here ² Data is based on all rental contracts agreed above ¥ 300,000 or where the internal area is 30 tsubo+ * New York data is to Q3 2016