Across our 30 tracked cities, rents rose by 0.6 % in H2 2025, contributing to full year growth of 2.2%. For many, renting has become a strategic choice that offers flexibility, mobility and insulation from interest-rate volatility.

Throughout 2025, higher interest rates meant some households opted to delay purchases and turn towards prime rentals that provided convenience and liquidity. This dynamic was especially prominent in markets experiencing population inflows, widening supply gaps or significantly elevated interest rates. As central banks are expected to gradually ease interest rates in 2026, some households may revisit buying, but we expect renting to remain central to mobility and lifestyle decisions.

Rental resurgence

Los Angeles, Hong Kong and Cape Town recorded the strongest rental growth of all World Cities in 2025, each rising by 10% or more as supply constraints intersected with demographic shifts and evolving tenant preferences.

Los Angeles led globally, with rents up 11.2% for the year, reflecting acute supply shortages in prime neighbourhoods and limited new development. Hong Kong followed closely, supported by demand from affluent Mainland Chinese renters, expatriates and corporate tenants targeting well-connected, established districts.

Cape Town also delivered robust growth, driven by internal migration, resilient foreign demand and low vacancy rates, particularly along the Atlantic Seaboard. Elsewhere, Sydney and New York City recorded solid 6.2% annual increases. In both cities, tight supply, low vacancy and sustained demand for high quality, amenity-rich properties continued to support competition for prime rental stock.

Softly, softly

Several cities saw rental declines in 2025, driven by oversupply, economic softness or shifting tenant preferences.

While Bangkok remained firmly tenant-friendly, rental movements were highly project-specific, and some districts saw slight declines as competition among landlords intensified.

In China, each of the cities in the index had varying degrees of downward pressure. Vacancies rose due to oversupply from expanding institutional portfolios and increased listings by individual landlords. While well-located prime new builds were more resilient, broader market conditions remained challenging amid subdued demand, economic uncertainty, and greater price sensitivity among tenants.

Lisbon recorded a small annual decline of 3.4%, although the high-end segment remained notably firm due to limited available stock. Miami saw rents flattening despite the city continuing to be one of the most in-demand markets in the US.

Outlook

We forecast average global prime rental growth will be at 1.8% in 2026. Savills local agents expect rent to marginally outpace capital value growth – forecast at 1.3% on average - as households and investors continue to navigate a complex macroeconomic landscape. We anticipate the strongest increases will be seen in Lisbon, Cape Town and Madrid, with each expected to exceed 5% growth given sustained international demand and structural supply shortages.

We expect Mainland China cities to see modest rental declines of up to 1.9% in 2026 as prime stock stabilises, with wider secondary markets remaining under pressure. Quality and location will remain the primary differentiators, with newer, well-located, professionally managed properties retaining appeal.

European supply shortages, particularly in Madrid, Lisbon, Barcelona, Athens, Milan and Rome, are expected to intensify rental pressures. Expatriates and highly skilled professionals will continue to drive demand across global hubs.

Yields

Rental strength is supporting yields across global markets

Prime gross yields moved out by 13 basis points in 2025 to 3.2% as global rental markets recorded stronger growth than the sales markets.

Los Angeles, which had strong rental growth in 2025, saw yields move out fastest, to 6.6% (+101 bps). In Hong Kong, where a shortage of prime residential supply met increasing numbers of expatriate renters from Mainland China, yields moved out to 2.8% (+37bps).

Other high-yielding cities included New York, Dubai, Cape Town and Athens, which all had good rental growth in 2025. Despite the capital value growth forecast for 2026, we expect rents are likely to continue outperforming sales.

Average regional yields are the highest in North America and the Middle East. In North America, the persistently high mortgage costs have pushed more prospective buyers into rental markets across the United States, with yields averaging 4.5%, up 10 bps from December 2024. While declining rates should increase the number of sales over 2026, prime supply shortages may keep potential buyers in the rental market for longer, further supporting rental price growth.

Prime yields average just 2.3% across Asia Pacific, the lowest of any region in the index. Home ownership is especially coveted as a store of wealth, a trend that has fuelled capital value growth and kept yields low over the last two decades.