Prime London rents stay steady in May
Rental rates for Prime Central London stayed steady in May, according to Knight Frank.
The firm’s latest report for the UK capital shows that rental values remained static, the first time rents haven’t dipped since June 2012. The bucking of the downward trend in the prime market could mark a return to growth for London’s luxury rental sector.
Indeed, some areas have seen rents increase in 2013 so far: rents have climbed 2.6 per cent in Kensington in the first five months of the year and 1.9 per cent in Marylebone.
Overall, the capital’s high-end rental sector has seen rents edge down 0.3 per cent in 2013.
“The annual fall in rents now stands at 2.9 per cent,” comments Liam Bailey, Global Head of Knight Frank Residential Research.
“Underpinning the weaker dynamic over the past year has been the health of financial sector employment market, which continues to bear the brunt of weak economic activity in central London. Job vacancies in the City were 22% lower in April than the same time last year, according to Morgan McKinley’s London Employment Monitor.”
“While the financial sector still has hurdles to overcome, activity levels in London’s luxury rental market suggest that here a healthier picture is emerging,” Bailey adds. “The number of new tenancies agreed in prime central London is up by 39% so far this year compared to the first five months of 2012. Additionally, the number of new applicants is up so far this year, by 14%.
“The ratio between prospective tenant registrations and newly available properties, which stood at 3.0 in the first four months of 2012, has widened to 3.8 in the same period of 2013.
“The higher levels of activity in May have helped bring an end to ten months of declining rents. But while the general trend was for rents to remain unchanged during the month, there are pockets of rental growth within prime central London. Rents rose by 1.4% in St John’s Wood and by 0.1% in Kensington during May. Other markets where average rents have increased in 2013 include Belgravia, by 0.3% and Knightsbridge, by 0.2%.
“Our view, informed by a positive outlook for employment and business sentiment, as well as the cost barriers to owning a home, remains that rents in prime central London will increase by 1% this year, before posting stronger growth in 2014 and beyond.”