The most expensive cities in the world to rent in

A booming tech sector has made San Francisco the most expensive world city for the average renter, at a cost of £460 per week, ahead of New York and Los Angeles, according to latest analysis from international real estate adviser, Savills.

London ranks fourth most expensive for mainstream rents, at an average of £350 per week, some £90 per week cheaper than Francisco, after a marginal -0.6% fall last year.

Hong Kong, which alongside London is known for having among the world’s highest capital values, ranks 9th for mainstream rents, at an average of £320 per week, though with rental growth of 13.2% last year, Hong Kong could join the top five this year.

Paris continues to represent relative value on the world stage, with average rents a third cheaper than San Francisco. In the context of Europe, it is 14% cheaper than London and 12% cheaper than Dublin.

A top ten of world cities ranked by prime rental values looks very different. New York ranks most expensive, with an average £2,300 per week, around five times the mainstream average, and almost £400 per week more expensive than second place Tokyo.

Like Tokyo, China doesn’t feature in the mainstream list, but two cities – Beijing and Shenzen – appear in the prime listing. Amsterdam also makes the prime list, having seen prime rents rise by almost a fifth over the past year.

Mainstream rents

# City Mainstream rent per week 2017 Growth
1 San Francisco £460 +0.7%
2 New York £400 +0.4%
3 Los Angeles £390 +2.0%
4 London £350 -0.6%
5 Dublin £340 +5.7%
6 Chicago £340 +1.7%
7 Sydney £330 +1.4%
8 Miami £320 -2.1%
9 Hong Kong £320 +13.2%
10 Paris £300 +0.9%

Prime rents

# City Prime rent per week 2017 Growth
1 New York £2 300 +5.4%
2 Tokyo £1 940 +7.7%
3 London £1 700 -2.9%
4 Hong Kong £1 690 +2.7%
5 Amsterdam £1 370 +19.8%
6 Dubai £1 350 -11.0%
7 Dublin £1 270 +5.4%
8 Beijing £1 200 +2.2%
9 San Francisco £1 020 -3.1%
10 Shenzhen £1 020 +13.4%

Comparable rental values for each city are obtained by comparing the properties occupied by the same group of people but in different properties in each world city. Prime property is occupied by CEOs and directors and their families. Mainstream property is that occupied by administrative workers in the same company and their households.

“Our analysis tells us, perhaps counter-intuitively, that the cities that are most expensive to buy in are not necessarily the most expensive to rent in,” said Yolande Barnes, Savills head of world research.

“Hong Kong mainstream house prices are now around £1,070 per square foot, almost double the San Francisco average, but its mainstream rents are some 30% cheaper.”

“San Francisco’s story is one of increasingly high demand from tech-savvy millennials who continue to flock to the city against a market that struggles for stock because rent controls act as a deterrent to new landlords. Ironically, the controls that are advantageous for existing tenants actually contribute to rising rents for new tenants.”

The story in Dublin, New York and Los Angeles is also one of strong demand from a growing population and limited supply.

In Dublin, a buoyant domestic economy and constrained sales market during 2017, drove mainstream rents up by 5.7%, making this the fifth most expensive city for the average mainstream market household rent. At £340 per week rents are now 40% above their 2011 low and, perhaps surprisingly, on par with average rent in London.

“Investors and occupiers would do well to note the anomalies in the rental market,” Barnes said. “Some cities are ‘investors’ markets’ having seen strong rental growth, high rents but relatively low capital values. Rental yields are high in these cities.

“Others are low yielding. This is good for tenants in cities such as Hong Kong, as they’ll likely pay less for rent than for a mortgage, but not so good for investors unless there is the prospect of capital growth.

“Where yields are still relatively high, in Paris and Chicago for example, there is the prospect of further yield compression and consequent asset growth. Lower net yields in Sydney, Hong Kong and London make capital growth less likely without rental growth.”

Prime rents – a different order

New York tops the table for prime, or luxury, rentals at £2,300 per week (over five times the mainstream rent). A raft of new supply in the prime segment has boosted the quality of prime rental markets in New York and so boosted rents overall, but concessions are increasingly offered to fill new buildings.

Tokyo, which doesn’t appear at all in the top ten for mainstream rents is second most expensive global city for prime rents, at £1,940 per week. London and Hong Kong follow, at £1,700 and £1,690 per week, respectively and are higher up the table for prime than mainstream.

Savills said expects Hong Kong to overtake London in 2018 as rents are rising there but falling in London.

Amsterdam and Dubai also feature in the prime top ten, but not in the mainstream. This reflects demand for prestigious properties from global renters in these cities and the fact that a premium is being paid for relatively rare stock.

Amsterdam’s prime rents increased by 19.8% in 2017, putting it fifth at £1,370 per week. A major and growing hub for the European headquarters of multinational companies, rents have been driven up by relocating expats coupled with a shortage of stock.

Two Chinese cities feature in the top ten, Beijing and Shenzhen, with prime rents of £1,200 and £1,020 per week respectively. They also attract global, premium tenants (particularly as overseas residents are unable to buy) and prime stock remains relatively rare enough to command a premium.

Dubbed China’s Silicon Valley, Shenzhen’s population has risen from 300,000 in 1980 to 12 million today. Expats together with a rising number of wealthy domestic tenants have fuelled prime rental demand.

Read: There’s one thing that has done more harm to Cape Town’s property market than the water crisis

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The most expensive cities in the world to rent in