NEWS
Headline prime property rents in central London fall but lettings activity is healthy
11-10-2012
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It adds that the market is experiencing healthy lettings activity, however even though an annual rent fall of 2.3% does not seem especially dramatic it does weigh on income returns for landlords.
With gross yields falling to a new low of 3.2% in September, new entrants in the investment market are having to work their portfolios hard to minimise costs, especially voids.
While some locations are bucking the wider trend, rents have risen marginally over the past quarter in the City and Notting Hill, the general tenor is for weaker rents across all price brackets.
‘As we commented last month, weaker rents relate to London's weaker than expected economic recovery, with employment levels in the financial and business services sector in particular still contracting,’ said Liam Bailey, head of residential research.
‘However while rents are slipping, they are only part of the story. Activity levels confirm a healthier picture. While the volume of new rental instructions has risen by 20% over the past nine months, compared to the same period last year, this rise has been largely met by a rise in the number of new tenancies, which have risen by 18% over the same period,’ he explained.
‘The volume of new tenancy starts so far this year has outpaced the level seen in each of the last five years, confirming that there are healthy levels of demand for rental property,’ he added.
The Knight Frank Prime Central London Rental Index, established in 1995 is regarded as one of the most comprehensive index covering the prime central London residential marketplace. The index is based on a repeat valuation methodology that tracks rental values of prime central London residential property.
Prime central London is defined in the index as covering Belgravia, Chelsea, The City of London, Hyde Park, Kensington, Knightsbridge, Marylebone, Mayfair, Notting Hill, Hyde Park, South Kensington and St John’s Wood.
Prime London comprises all areas in prime central London, and in addition Canary Wharf, Fulham, Hampstead, Richmond, Wandsworth, Wapping and Wimbledon.
