Melbourne’s reputation on the world stage has grown over recent years and (in normal times) holds its own internationally in a multitude or areas from arts, to sporting events, food and entertainment, education, R & D innovation and many other disciplines.
In the last 12 months Melbourne again matched international cities but in a less desirable way as Covid lockdowns and travel bans triggered a fall in apartment rents in Melbourne and around the world by anywhere from 5% to 30% subject to each cities own market dynamics. It’s cold comfort for Melbourne apartment owners and an unwelcome accolade but millions of apartment owners around the world have had a very similar experience.
The good news is most cities are now recording a bottoming out and slight improvement in apartment rents especially as the Northern hemisphere Winter starts to thaw.
The US recorded a fall in apartment rents across many cities including;
– 26% down in San Francisco,
– 21% drop in New York and
– 12% fall in Chicago.
This report shows the tide has turned and market rents have started to increase in the last month.
Agents and owners in Toronto have turned to offering incentives including one months free rent, shopping vouchers and high speed internet subscriptions after their vacancy rate moved from 1.1% 12 months ago to a 50 year high of 5.7%.
Things got a bit willing in Beijing last November when owners, tenants and contractors protested at the offices of publicly listed Danke who defaulted on payments. Danke take long term leases on apartments and then sublease them. Their share price has fallen about 60% over the last 6 months although there could be more to this than just the apartment market head winds.
The recovery in apartment rents for major cities around the world will be in direct correlation with relaxing of restrictions on international and domestic travel which are both dependent on the roll out of vaccines globally. For Melbourne the return of international education, events, sport, corporate travel and tourism will be key drivers. While market rents have stabilised, a meaningful rebound in apartment rents will be more evident in late 2021 / early 2022 which will be helped along by a buoyant economy rebounding strongly.