PARIS has leapfrogged London to become the most expensive capital city to rent residential property, according to research released today by estate agent Savills.
The World Class Cities index, which analyses the cost of renting and buying in the world’s top 10 cities, shows the average cost of renting increased by 2.3 per cent in the second half of 2011, outpacing the rise in underlying house prices.
Rental growth in the so-called new world cities of Hong Kong, Shanghai, Singapore, Mumbai and Moscow slowed in the second half of the year to 1.8 per cent despite growing faster than old world cities since 2005.
Meanwhile the so-called old world cities – London, Paris, New York, Sydney and Tokyo – saw rental growth rise by 2.8 per cent in the second half.
“A key driver of rents across all of our cities is corporate demand which can have a short term perspective. Uncertainty surrounding the global economy and job security is leading more corporate employees, who might previously have bought, to rent,” Yolande Barnes, head of Savills residential research said.
Rents in Paris are now three times higher than those in Shanghai and Mumbai, the world’s cheapest capitals in which to rent, with London slipping into second place behind Paris.
The index also reveals it takes more than a year of renting to cover the costs of buying in London.