The firm’s Prime Global Rental Index recorded a fall of 0.5 per cent in the year to March, with North America continuing to be the strongest performing region, seeing an annual rise of 3.3 per cent. Toronto led the rankings with an annual increase of 8.9 per cent.
Taimur Khan, senior research analyst at Knight Frank, said, “Of the 17 cities tracked by the index, 11 have recorded flat or falling prime rents over the last 12 months.
“Luxury rental and sales markets tend to move in opposite directions. Luxury sales markets have been subject to increased regulation (as in New York) and a changing tax landscape (as in the UK). Prior to the implementation of some of these regulations, volumes in prime sales markets have increased.
“This has led to an increased level of supply of prime rentals and, therefore, prices have fallen. In the coming year we expect the prime global rental index to rebound as these factors are absorbed.
“Uncertainty in global markets – partly as a result of Brexit, the US presidential election and the timing of the next US rate hike – has led to investment decisions on a corporate level being put on hold as firms adopt a wait-and-see approach.”
The index shows that Africa has replaced Europe as weakest-performing region with rents falling on average by 3.2 per cent annually. Nairobi occupies the bottom ranking with reduced corporate demand and increased supply causing rents to fall 7.9 per cent.