Uncertainties due to political and economic worries are translating into wary buyers and rising rents as luxury units sit longer on global housing markets while potential sellers wait for “better” pricing environmenrs before becoming real sellers.
Mansion Global’s V.L. Hendrickson looked into what was happening market-wise with global luxury properties, luxury rentals and investor action.
According to a recent report by Home.co.uk, some six London neighborhoods are seeing double-digit rent inflation due to sales, prices and consumer confidence levels going into tailspins primarily because of concerns over Brexit. “…soaring rents (are) tempting investors back into the capital’s letting market. Rock-bottom sales, rental stock levels (and significant rent increases) are initiating revitalization…” in the boroughs of Wandsworth, Hackney, Haringey, Hammersmith, Fluham, Southwark and Islington.
Additionally, Knight Frank’s August Prime London Lettings report indicated that the number of new prospective tenants in Britain’s capital increased 22% y/y compared to July 2018. Simultaneously, the number of new rental listings increased by just +1% so that competition for super prime leases ($2.500/week) is, to say the least, stiff. This $2,500/week price tag is the highest price tag for super prime leases in 5 years.
In Miami, Hendrickson reported that rents are up in all sectors of the rental market to an average of $1,729/month, an increase of +4% in August 2019. Miami is a city where international investors look to buy with the expressed interest to rent because of the enormous tourism industry there. Compare Miami to Austin, if you will, where investors may forego buying one luxury property in order to buy two or more mid-level properties that they could likely rent more easily.
In New York City, Douglas Elliman’s latest report on rentals indicates luxury rents increased nearly +4% in August 2019 from August 2018. The median luxury rent in NYC came in at $8,000/month, an increase of 3.9% from $7,700/month in August 2018.
Demand is high in terms of leasing these luxury rental properties, according to Hal Gavzie, executive manager of leasing for Douglas Elliman Real Estate. Sales, on the other hand, have dropped.
Median lux sale prices in NYC keep sliding (now -6.2% at $6.15M in Q2 2019 from $6.56M in Q2 2018) and lux sales volumes have been hurt by worries about a possible recession and other uncertainties. However, Richard Cantor, principal at Cantor Pecorella, said, “There’s an increasing interest in rentals that offer luxury and the lifestyle you’d find in an upscale condo.
And in terms of rental demand, Vickey Barron, an agent with Compass in Manhattan, said, “I have plenty of clients ready to rent at luxury properties.”
So who knows? With decreasing prices for luxury rental properties, will opportunistic investors start jumping on luxury rental properties in NYC as they are in London and Miami?