G
lobal luxury rental markets are transitioning to a more stable phase, with growth stabilizing across key international cities. According to Knight Frank, prime market rents rose 3% year-over-year in the first quarter of 2025, up from 2.3% in Q4 2024. This rebound follows a slowdown in 2023, reflecting a normalization in housing demand after the pandemic-fueled surge in 2021-2022.

    The Prime Global Rental Index (PGRI) experienced a sharp recovery starting mid-2021, peaking at 10.7% annual growth in Q1 2022. However, momentum has since declined, aligning with long-term averages. Los Angeles led cities with a 7% rise in luxury rents over the past year, followed by Hong Kong and Tokyo.

    Some markets continue to outperform, while others show signs of stabilization or decline. Auckland posted a quarterly gain despite a 12-month decline, signaling a potential inflection point. Toronto recorded a 3.3% annual drop, the weakest among tracked cities. Singapore and London remained flat year-over-year, with recent data suggesting modest recovery.

    Inflation continues to erode real returns for landlords, with nominal rental growth at 3.0% in Q1 but only 1.1% when adjusted for inflation. Knight Frank's global head of research notes that the rental cycle is entering a more mature phase, with demand remaining resilient in core hubs but returns moderating due to inflation, currency risk, and local regulatory factors.