Global luxury rental markets are entering a more measured phase after a post-pandemic boom, with rental growth stabilizing across key international cities, according to property consultancy Knight Frank.
Rents across a basket of 16 global prime markets rose an average of 3% year-over-year in the first quarter of 2025, a slight uptick from 2.3% in Q4 2024. The rebound follows a marked slowdown throughout last year, reflecting a normalization in housing demand after the reopening-fueled surge in 2021-2022.
The Prime Global Rental Index (PGRI) posted a sharp recovery beginning in mid-2021, peaking at 10.7% annual growth in Q1 2022. That surge followed pandemic-era lows when rental growth bottomed at -2.7% in Q1 2021 amid strict mobility restrictions. Since then, momentum has steadily declined, aligning more closely with long-term averages.
Still, some markets continue to outperform. Los Angeles led all cities with a 7% rise in luxury rents over the past 12 months, followed by Hong Kong (+6.5%) and Tokyo (+6.1%), underscoring sustained demand for high-end housing in key U.S. and Asia-Pacific hubs. Monaco (+5.1%), Berlin (+4.9%), and Frankfurt (+4.7%) also saw solid gains, though Monaco registered no quarterly growth in Q1.
Liam Bailey
Short-term performance highlights shifting dynamics. Auckland posted a quarterly gain of 4.2%, despite a 12-month decline of 0.4%, signaling a potential inflection point. Meanwhile, Toronto recorded a 3.3% annual drop, the weakest of the tracked cities. Singapore and London remained flat year-over-year, though recent data suggests modest recovery underway.
Inflation continues to erode real returns for landlords. While nominal rental growth came in at 3.0% in Q1, inflation-adjusted gains were just 1.1%. That compares to a real growth peak of 5.4% in early 2022, indicating reduced investor yields despite resilient headline figures.
“Our latest data points to a more mature phase of the rental cycle in global prime markets,” said Liam Bailey, Knight Frank’s global head of research. “While demand remains resilient in core hubs, returns are moderating, and investors must increasingly account for inflation, currency risk, and local regulatory factors when assessing performance.”
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