As prime rents in Toronto jumped, the US experienced an overall slower rental growth in the year to June, according to research.

Cape Town and Zurich led the annual rankings with prime residential rents rising 10 per cent and 8 per cent respectively in the year to June, while Toronto followed with a 4.5 per cent increase, according to Knight Frank.

As New York registered a 2 per cent year-on-year drop and came in 14th place, Toronto was the only North American to make an appearance in the top 10 of Knight Frank's Prime Global Rental Index.

The index seemed to mirror sluggish global economic growth and high-end residential tenants moving to the US were identified as key beneficiaries of slower rental growth, which Knight Frank said could mitigate the effects of a stronger dollar. The stronger dollar also means US companies are eyeing opportunities for international expansion, it highlighted.

“According to Worldwide ECR, 45 per cent of global multinationals expect international assignments to increase but this figure rises to 54 per cent amongst those with headquarters in the US,” said Kate Everett-Allen, partner of residential research at Knight Frank.

In Cape Town, potential homebuyers found themselves looking for rental accommodation instead amid a shortage of rental stock and the introduction of tighter credit regulations.

Globally, growth was muted with the index up only 0.2 per cent over the year. Although 10 of the 18 cities tracked recorded a climb in rents, this was the slowest rate of growth since the first quarter of 2010. 

“Although sales markets in cities such as Singapore, London and Nairobi are pausing for breath (in most cases due to policy intervention be it via taxes or mortgage regulation) the commonly-held perception that prime rental markets will, in contrast, start to accelerate isn’t holding true,” said Everett-Allen.