Friday, 9 March 2012 10:59 AM
Paris has taken over from London as the most expensive city for renting a home, according to Savills.
The property firm's World Class Cities Index shows that rents are outpacing house prices in many global cities with an average rise of 2.3 per cent in the second half of 2011 compared to just one per cent for capital values. Demand from domestic and international corporate tenants is fuelling the increase.
Paris and London are the most expensive rental markets, with rents three times more than those in the cheapest global cities, Shanghai and Mumbai.
However, New York saw the strongest growth in rents with 6.5 per cent in the first half of 2011 and 6.2 per cent in the second half. The US city also had the highest yields (6.9 per cent).
New world cities like Hong Kong, Moscow and Shanghai saw growth slip in the second half of the year.
Yolande Barnes, head of Savills residential research, said: "Rental levels are an indication of healthy market fundamentals in terms of occupier demand, and by this measure the markets of Paris, London, Hong Kong and New York look sound.
"The strong occupier demand in these cities and the relatively low capital values of Paris, London and New York (particularly when compared to Hong Kong) make them look fairly valued for investors - especially New York which ranks among the cheapest world class cities to buy."