Singapore is one of three stand-out markets where rents have surged tremendously since 2021, the report said. While rents have risen by a cumulative 50.3 per cent in Singapore, they have increased by 55.2 per cent in London and 53.4 per cent in New York, respectively, in this period.

“Over the past two years, Singapore’s rental market has witnessed unprecedented surges, setting records,” said Christine Li, head of research, Asia-Pacific at Knight Frank. “The higher rental rates are currently undergoing a normalisation phase against the backdrop of slower economic growth.

“In Hong Kong, the reset of rental prices occurred earlier, and the market is now striving to achieve equilibrium, with increasing demand surpassing available supply.”

The property consultancy has forecast that the rental markets in both Singapore and Hong Kong will grow by 3 to 5 per cent next year.

“We posit that sustained demand for long and short-term residential leasing, driven by entrants under the ‘Top Talent Pass Scheme’ and overseas students in Hong Kong, will play a pivotal role in bolstering the recovery of the residential leasing market,” Li said. “This effect is expected to be particularly pronounced in areas proximate to universities and emerging residential districts.”

An estimated 70,000 people have arrived in Hong Kong this year through talent admission schemes, double the government’s original target, according to the latest figures cited on Saturday by Labour and Welfare Secretary Chris Sun Yuk-han.

As Singapore’s soaraway rental boom cools, Hong Kong rents heat up

Besides demand for accommodation from its new residents, the city’s elevated interest rates have also shifted demand for home purchases to the rental market, according to Martin Wong, director and head of research and consultancy for Greater China at Knight Frank.

Rising interest rates, which have pushed up mortgage rates, have risen to a 16-year high with base rates at 5.75 per cent. The Hong Kong Monetary Authority has raised rates by a cumulative 5.25 percentage points since March 2022.

“Affordability continues to be an issue for homebuyers, as interest rates are set to remain higher for an extended period,” Li said.