London’s prime rental market is proving to be one of the priciest in the world, with tenants shelling out an average of £9.32 per square metre per week, according to a new report from Savills.
That’s higher than in global hotspots like Tokyo (£8.15), Dubai (£7.45), and Milan (£6.78), underscoring the UK’s capital as a standout in an otherwise resilient but uneven global prime residential landscape.
The findings come from Savills’ 2026 World Cities Prime Residential Index, which tracks performance across 30 major markets amid lingering macroeconomic and geopolitical headwinds.
While overall prime rental growth averaged 2.2% in 2025, outpacing capital value increases of 1.8%, London’s high absolute costs reflect chronic supply shortages in its premium neighbourhoods, coupled with steady demand from international professionals and affluent locals.
“Prime residential markets showed resilience in 2025, despite ongoing macroeconomic and geopolitical uncertainty,” said Victoria Garrett, head of global residential at Savills (excluding UK).
“What stood out was the enduring global appetite for exceptional homes. Limited supply, steady cross-border capital and the continued appeal of vibrant city living supported performance across many key markets.”
Cities like Los Angeles, Hong Kong, and Cape Town led the pack with annual rental hikes exceeding 10%, driven by tight inventory and shifting lifestyle preferences.
By comparison, London’s market has seen more modest growth, but its baseline rents remain elevated due to factors like strong corporate relocations and a rebound in international interest as economic conditions stabilise.
Asia’s markets, including Tokyo and Seoul, benefited from domestic demand and limited high-quality stock, posting robust gains. Dubai continued its hot streak, fuelled by global connectivity and quality-of-life appeal, though its per-square-metre rents trail London’s. European cities like Amsterdam and Milan also performed well, but again, London’s costs stand out amid broader affordability pressures across the continent.
Low growth expected
Looking ahead to 2026, Savills forecasts average prime capital value growth of just 1.3% across its indexed cities, with rents expected to slightly outpace at around 1.8%.
Markets like Seoul, Tokyo, and Madrid could see price increases above 4%, while European supply constraints in places like Barcelona, Athens, and Milan are likely to keep upward pressure on rents.
“Residential property will remain central to policy and economic debate in 2026, particularly across North America and Europe,” the group said. “As affordability, access and growth concerns converge, governments face rising pressure to reform tax frameworks, incentivise development, and deliver long-term housing strategies that balance investor confidence with social stability.”
The cost of prime London renting
For renters in London, the numbers paint a challenging picture. At £9.32 per square metre weekly, a typical 100-square-metre prime apartment could command over £48,000 annually in rent alone, before utilities or service charges.
This positions the city as a premium destination, but also amplifies calls for more supply to ease the burden.
Prime yields across the 30 markets averaged 3.2%, signaling stable income potential for investors amid easing inflation and potential rate cuts.
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