New York City’s luxury rental market is thriving with prices up 6% this year, while those in London continues to tumble under travel restrictions
- Rents in Manhattan rose 5.9% through March, while London fell 14.3%
- The New York market is getting a boost from the better economic outlook
- London remains badly affected by restrictions on international travel
The luxury rental market in New York City is rapidly recovering from pandemic stagnation, while prices in London continue to fall, new data shows.
In Manhattan’s most expensive neighborhoods, rents rose 5.9 percent this year through March, while in central London, prices fell 14.3 percent over the same period, according to data from Knight Frank.
While New York City has been buoyed by the improving US economic outlook and vaccine roll-out, the London market continues to suffer from international travel restrictions.
“There is generally greater optimism in the US market,” said Kate Everett-Allen, Knight Frank’s chief of international residential research. Bloomberg.
Luxury rents in Manhattan (blue) are rising while they are falling in London (gray)
International travel restrictions have put a damper on the rental market in London. Above, change in passengers at Heathrow (red) is compared to rental property availability (blue)
“What we’ve seen in London, and we’ve seen it in New York, in recent months is that the number of leases is starting to rise and the pace of rent declines is really starting to slow down,” she said.
Both London and New York have taken steps in recent months to ease pandemic restrictions, although New York has arguably moved more aggressively, with Mayor Bill de Blasio and Governor Andrew Cuomo vying over who can lift the restrictions faster.
In London, the supply of luxury rentals has increased significantly due to the closure of the short-term rental market, but demand has been limited due to international travel restrictions.
However, analysts at the brokerage and consulting firm see the trend approaching a low point and predict that London rents could rise rapidly.
‘As the UK continues to unlock the economy and people take up residence permits, the flow of short let properties that have entered the long let market will start to wane and the declines in rental value will eventually reverse’, Tom Bill, head of UK Residential research at Knight Frank, said in a statement.
“ Question marks remain around international travel, affecting the demand side of the equation, although the rules should relax from next month, ” he added.
Tourists were spotted by London Bridge last month as travel remains limited in the UK
A large crowd of tourists is seen in Times Square in March as the city reopens
The agency notes that a trend toward city flight during the pandemic has begun to reverse, with some tenants choosing to move closer to central London to take advantage of lower rents.
“There has always been a group of people living on the periphery of central London who couldn’t afford to move on,” David Mumby, head of Prime Central London Lettings at Knight Frank, said in a February note.
“That has changed and we are seeing movement from Wandsworth and even Croydon to Chelsea and South Kensington.”
In New York, median rents in both Manhattan and Brooklyn have started to recover, according to data from Douglas Elliman.
However, total rental vacancy in Manhattan was 9 percent higher in March than a year ago, and prices fell 14 percent.
In Brooklyn, median rents were 10 percent lower than a year ago, but higher than in January.