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Luxury Russian rents slump as ruble tanks

Pedestrians pass luxury residential properties and private residences in the Golden Mile district of Moscow, Russia.
Andrey Rudakov | Bloomberg | Getty Images
Pedestrians pass luxury residential properties and private residences in the Golden Mile district of Moscow, Russia.

The sharp decline in the Russian ruble against the dollar caused high-end residential rental prices in Moscow to tank some 16 percent last year, while prime rents in Singapore and China also slipped.

Rent in the Russian capital is measured in U.S. dollars, and weakness in letting prices is directly linked to the ruble's fall, according to property consultancy Knight Frank. The ruble fell 68 percent against the dollar in 2014.

The fall in Moscow rent dragged on Knight Frank's global prime rental index, which it said saw a "notable slowdown" last year. It rose by just 0.6 percent in 2014 -- its weakest rate of growth since 2009.

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Knight Frank said the weak index results "underline the global economy's fragility," and that "demand and activity in the prime residential rental market is strongly linked to business activity and employment levels."

Rental prices of luxury property in Beijing fell over 6 percent in 2014, while prices in Singapore also displayed weakness, sliding close to 4 percent.

Kate Everett-Allen, partner of residential research at Knight Frank, said the slow overall growth, "hides the fact that 12 of the 17 cities we cover saw luxury residential rents increase or remain static in 2014."

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Tokyo led the rankings, with luxury rents ending the year over 11 percent higher. Japan emerged from recession at the end of 2014 and the country's government expects the economy to grow by 1.5 percent in 2015.

Rents also rose in Dubai, by more than 8 percent over the year.

Meanwhile in London, although rental growth slowed to zero in prime central London by the end of 2014, the annual increase in rental values reached 3.3 percent -- the highest rate in three years, according to Knight Frank.

The consultancy's prime property index looks at the top 5 percent of the housing market in each city, and is compiled on a quarterly basis using its own data.