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New York City in Dead Heat with Singapore for Highest Rent Increases

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By: Hadassa Kalatizadeh

Residential rental prices have skyrocketed in New York.

As reported by Bloomberg News, a new report shows that New York and Singapore are tied for the highest rent increases in the world.  The report published on Friday by Savills Plc, shows that in both cities rent jumped 8.5 percent in the first half of 2022, beating increases seen in all other cities.  London was ranked third, with prices rising 7.7%, followed by Lisbon and Miami, in the study which surveyed some 30 cities.  Hong Kong was at the very bottom of that list, with a decline in rental prices of 1.3 percent, though the city is already one of the most unaffordable.   The city of Shenzhen, which is China’s technology hub, also saw rental prices fall by 0.7 percent, due to Covid-19 related restrictions.

So, renters beware.  Despite the jump in interest rates and the global uncertainty, prime residential rents are outpacing capital value growth, in the first half of 2022.  Rents inched up by an average of 3.1%, compared to a 2.4% increase in capital value, the report said. This can be chalked up to an array of factors including people returning to urban cities after the lockdown-led exodus, and a return of international travel.  “A lack of inventory will continue to fuel growth in the near term, especially for the type of residences prime tenants are demanding: centrally located, quality units with larger floor plates,”said Paul Tostevin, head of Savills world research. “For these properties, the Covid lockdown rental deal is definitely a thing of the past.”

Manhattan rental prices are now peaking to record highs, with the number of available units declining each month. During the pandemic, broker fees were easy to dodge, but now they are making a comeback. Landlords were throwing in “free rent” for even a few months, but now there are bidding wars and tenants willing to pay above the asking rents in hopes of securing an apartment.  Housing experts don’t expect any relief for renters until the fall at the earliest.  “Coming out of Covid, if you were a renter, you had more leverage than ever,” said Keyan Sanai, a Douglas Elliman agent. “You now have less leverage than you’ve had in a very long time because there are 10 people standing behind you.”

Crain’s NY summed it up, saying that the summer of 2020 was known for a sharp decline in rental prices, when the shutdowns led people to leave the city searching for greener pastures.  Then, the summer of 2021 rolled in with steep increases as people came back and prices returned to pre-pandemic levels. Now, this summer, renters will have to fight to find a place in the city, showing that people know this is where they want to be, even despite lingering work-at-home arrangements.  “Landlords are back in the driver’s seat. That’s really what we’re seeing,” said Hal Gavzie, executive manager of leasing at Douglas Elliman. “People are definitely being more flexible in neighborhoods on their wish list, knowing that their options are much more limited than they’ve been in the past.”

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