Prime London, one of the top residential property hubs of the world, is witnessing heightened activity in the lettings market as the number of tenancies agreed increased substantially in recent times.
In May 2018, rental values entered the positive territory in Prime Central London, where the lettings market was adversely impacted in the last one year owing to tax changes and Brexit, discouraging landlords and tenants from carrying out new transactions.
According to the latest Prime London Letting Index from Knight Frank, rental values are expected to increase by 0.5 per cent in the near term in Prime Central London after registering negative growth for several months.
This finding comes a relief to landlords, who are worried about the falling rental values in Prime Central London areas of Aldgate & the City, Belgravia, Chelsea, Hyde Park, Islington, Kensington, Knightsbridge, Marylebone, Mayfair, Notting Hill, Riverside, South Kensington, St John’s Wood, Tower Bridge and Victoria.
The number of tenancies agreed at £5,000+/week rose 24 per cent in the year to April, while the tenancies for properties below £1,000 the increased by 12 per cent in Prime Central London. There was 1 per cent rise in the middle price bracket, where demand is typically stronger among senior executives.
Prime Outer London also witnessed increased activity in the lettings market. The number of tenancies agreed above £1,000/week rose 28 per cent in the year to April compared to a 19 per cent increase for properties below £1,000. Interestingly, this is the opposite trend to Prime Central London. The finding also shows that demand among price-sensitive corporate tenants is rising in better value-for-money locations in Prime Outer London despite economic uncertainty.
The Index showed that rental values are strengthening in Prime Outer London areas such as, Barnes, Battersea, Belsize Park, Canary Wharf, Chiswick, Clapham, Dulwich, Fulham, Hampstead, Queen’s Park, Richmond, Wandsworth, Wapping and Wimbledon, as supply of properties to the lettings market has fallen.
These trends indicate that the lettings market in Prime London is on the recovery mode. As it is yet to fully absorb the impact of Brexit, landlords continue to exercise caution before concluding any new transactions. Nevertheless, the increased lettings activity reflects the confidence of the landlords in Prime London areas.
Source: Knight Frank