Luxury rentals recover globally, Indian investors eye London, New York and Singapore

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Luxury rentals across leading global cities are showing a modest recovery, with Indian investors continuing to favour markets like London, New York, and Singapore, where sustained rental growth reinforces their appeal as stable long-term investment destinations, according to Knight Frank’s latest Prime Global Rental Index.

Luxury rentals across leading global cities are showing a modest recovery, with Indian investors continuing to favour markets like London, New York, and Singapore, (Photo for representational purposes only)(Pixabay)

Luxury rental growth across 16 world cities averaged 3.5% in Q2 2025, signaling a modest recovery after last year’s slowdown. Hong Kong records highest YoY rental growth of 8.6% in Q2 2025.

Construction shortfall across key cities began to bite in terms of supply, and the return to office trend has supported rental demand, especially in gateway markets across the world.

Hong Kong (8.6%) and Tokyo (8.3%) recorded the fastest annual rental growth. New York (6.9%) saw strong gains, with a significant 6.6% quarterly rise. European hubs like Berlin (4.9%) and Frankfurt (4.7%) maintained steady growth, the Index showed.

London (1.5%) and Singapore (1.5%), while lower on the index, continue to show resilience, supported by international demand and constrained new supply, it said.

Over the past five years, Miami has led prime-rental growth by a wide margin – surging 61% – driven by domestic migration and luxury demand. It is followed by New York, which saw a 47% rise underpinned by a post pandemic rebound in Manhattan rental demand, it said.

Asia-Pacific powerhouses Sydney and Singapore each posted robust gains of 43%, as did London, whose 43% climb was fuelled by international interest. Melbourne (40%) and Los Angeles (38%) also recorded strong increases. European markets varied: Berlin achieved 31%.

International prime property an attractive diversification strategy for Indian buyers

“Indian investors have always had a strong affinity towards global gateway cities such as New York (Rank 3), Singapore (Rank 13) and London (Rank 14). The sustained rental growth in these markets reaffirms their appeal as stable long-term investment destinations. Even in a high-interest rate environment, constrained supply and consistent demand are expected to support rental growth, making international prime property an attractive diversification strategy for Indian buyers,” said Shishir Baijal, chairman and managing director, Knight Frank India.

Liam Bailey, Knight Frank’s Global Head of Research, said, “Prime global rental markets are beginning to see a move back to trend rates of growth. While affordability is very tight in most markets, demand continues to outpace supply, and our view is growth will tick higher from here through 2025.”

Elevated interest rates and persistent inflation are tempering prime rental growth in major cities, as affordability constraints curb tenants’ ability to bid up rents. However, strong immigration underpins growth, and demand set against limited new supply – will push rents towards long-term trend rates, it said.

New York and Miami are expected to sustain mid-single-digit gains, while Hong Kong and Tokyo face moderation amid regulatory headwinds. European hubs such as Berlin and London should see tight new supply delivery support low- to mid-single-digit growth, it added.

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