New York City's luxury rental market is booming with prices up 6% this year while London's continues to tumble under travel restrictions
The luxury rental market in New York City is quickly bouncing back from pandemic doldrums, while prices in London continue to tumble, new data shows.
In Manhattan's most expensive neighborhoods, rents rose 5.9 percent this year through March, while prime central London saw prices fall 14.3 percent in the same period, according to data from Knight Frank.
While New York City has been buoyed by the improving U.S. economic outlook and vaccine rollout, London's market continues to suffer under international travel restrictions.
'There's a general greater optimism in the U.S. market,' Kate Everett-Allen, head of international residential research for Knight Frank, told Bloomberg.
Luxury rental prices in Manhattan (blue) are rebounding while they drop in London (grey)
International travel restrictions have put a damper on the London rental market. Above, the 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 the last few months is that the number of leasings is starting to tick upwards and the rate of declines in rents is really starting to slow,' she said.
Both London and New York have been taking steps to ease pandemic restrictions in recent months, though New York has arguably moved more aggressively, with Mayor Bill de Blasio and Governor Andrew Cuomo battling over who can lift restrictions more quickly.
In London, luxury rental supply has spiked due to the closure of the short-term rental market, but demand has been curtailed by international travel restrictions.
However, analysts at the estate agency and consultancy see the trend nearing a bottom, and predict London rents could soon rise.
'As the UK continues to unlock the economy and people take staycations, the flood of short-let properties that came onto the long-let market will begin to recede and rental value declines will eventually reverse,' said Tom Bill, head of UK residential research at Knight Frank, in a statement.
'Question marks remain around international travel, which affects the demand side of the equation, although rules should start to ease from next month,' he added.
Tourists are seen by London Bridge last month, as travel remains restricted in the UK
Large crowd of tourists are seen at the Times Square in March as the city reopens
The agency notes that a trend toward an urban exodus during the pandemic has begun to reverse, with some renters 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 go in any further,' David Mumby, head of Prime Central London lettings at Knight Frank, said in a February note.
'That has changed and we're seeing movement from areas including Wandsworth and as far away as Croydon into Chelsea and South Kensington.'
In New York, median rental prices have begun to rebound in both Manhattan and Brooklyn, according to data from Douglas Elliman.
However, overall Manhattan rental vacancies were up 9 percent in March from a year ago, and prices were down 14 percent.
In Brooklyn, median rents were down 10 percent from a year ago, but up from January lows.
