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International tenants dominate top end of central London prime rental market
International tenants and low stock levels are key features of the current prime central London lettings market, especially at its uppermost levels, according to the latest analysis report. Domestic tenants, including students and middle ranking pied-a-terre seeking business commuters, tend to dominate the rental market price band of £300 to £1,000 per week, according to the review from prime lettings specialist E J Harris. But the £1,000 to £4,000 per week price band is characterised by bankers and corporate tenants and above £4,000 per week the market is dominated by ultra-wealthy visitors from Russia, Africa, the Middle East and Asia. Using research from their own client database, local market intelligence and drawing on wider industry figures, the firm has produced a guide to top addresses, tenant profiles, typical apartment/house sizes for different rental price brands across the prime sector. It found that rental values have increased by 1% in prime central London over the past three months, achieving an average gross yield of 2.92% and the average rent per square foot in is currently £54. Tenants seeking rental properties on the market for £300 to £500 per week in prime central London can expect to find one bedroom apartments, providing 300 square feet of accommodation, typically located in Shepherd’s Bush, Holland Park and Bayswater. Tenants in this price brand are normally individuals or young couples aged 25 to 35 who looking for a pied-a-terre in the capital or young graduates who have landed their first job. Stock in this price brand is currently down 10%. Those searching for homes available to rent for £500 to £1,000 per week can find one or two bedroom apartments, providing 700 to 900 square feet of accommodation. Tenants will typically find a wider choice of properties available at that price range in Notting Hill, Marylebone and East Mayfair where the district borders Oxford Street. Tenants with this price brand are often students from wealthy families, whose parents are willing to pay their entire rent and deposit up front in order to secure the property they want. This price bracket also includes European and American corporate tenants who are relocating to London, and are typically couples with children or young single professionals. Stock within this price band is also currently down 10%. Tenants looking to spend £1,000 to £2,000 per week can expect to find two bedroom apartments offering 1,000 to 1,500 square feet of living space and situated in Mayfair, Belgravia or Marylebone. Typically, tenants searching for properties at this level are socialites seeking luxury pads or corporate tenants relocating to London, usually for a three-year stay. Stock in this price band is currently up 5%. E J Harris reveal that tenants able to spend £2,000 to £4,000 per week will find two and three bedroom luxury apartments situated in Belgravia, Mayfair or Knightsbridge. The typical profile of tenants seeking homes at this price range are CEO’s and… Continue reading
UK commercial property market set to see record breaking year as confidence rises
Strong investor confidence is set to propel the UK’s commercial property market into a record breaking years with deal volumes at the end of the third quarter already over £50 billion. If, as anticipated, volumes in the fourth quarter of 2015 follow the patterns observed in the final quarters of 2013 and 2014, investment in the UK commercial market this year will break the £70 billion barrier for the first time. According to international real estate advisor Savills it is the strong confidence in the market that is the driving force behind the growth in activity. Its latest report says that despite ongoing uncertainty over Greece’s position in the Eurozone and a slowdown in the Chinese economy, UK property as an asset class continues to outperform investor expectations. Average prime yields have remained at 4.65% for the second successive month, however resurgent retail activity and strong UK institutional interest in south east offices could exert downward pressure on yields in these sectors, the report warns. ‘Last year 59% of investment activity in UK property took place outside London, a trend that is set to continue as investors seek the value afforded by the rental growth prospects in supply constrained regional markets, alongside the opportunity to build scale by acquiring portfolios,’ said Kevin Mofid, research director at Savills . ‘However, regional markets can be more susceptible to Government policy changes than the capital. Investors should therefore consider the potential impact that the extension of commercial to residential permitted development rights could have on rental growth and vacancy rates in regional office and industrial markets,’ he explained. ‘Nonetheless, given that investors currently place UK property head and shoulders above other asset classes, we don’t envisage that these measures will materially affect investment activity going into 2016,’ he added. A separate report from Savills says that non-domestic real estate investment outside of London will reach a record high by the end of 2015 with some £10.5 billion invested in real estate outside the capital by international investors in the first eight months of 2015. Savills predicts that this will rise to £14 billion by the end of 2015, the highest volume since it started collecting data in 2000, and nearly half of all the non-domestic investment in the UK as a whole. In the 12 months to August 2015, portfolio purchases accounted for the majority, 64%, of investments, due to the preference of investors for larger lots which are less common outside of London. Scotland and the South East proved to be the most popular regions, each attracting a 7% share of investment, with the North West and West Midlands in joint second place attracting a 5% share each due to the strong rental growth projections for the Manchester and Birmingham office markets, as well as the comparatively high yields on offer. The most popular sector for investment is retail and leisure, accounting for 57% of investment, driven by several… Continue reading
Demand for prime rental property in central London falls
Demand for rental property in central London’s prime market has fallen in recent months as global companies curb costs resulting in rental values falling in October. Rents in this sector were down 0.5% last month, the steepest decline in two years and annual rental value growth slowed to 1.5% after peaking at 4.2% in May. The data from the latest rental report from real estate firm Knight Frank also shows that the number of tenancies agreed in September was 12% lower than the same month in 2014 and average prime gross rental yields were flat at 2.95%. According to Tom Bill, head of London residential research at Knight Frank, it has been a year of two halves for the prime central London lettings market. Annual rental value growth peaked at 4.2% in May, the month of the general election, as demand transferred from the sales market. ‘The cause was uncertainty around property taxation and increased rates of stamp duty mean it remains a live issue, particularly in the super prime £5,000 plus per week price bracket. However, anxiety around the global economy has dampened demand since the summer,’ he said. ‘The uncertainty has centred on events in China, which has caused companies to curb relocation budgets and recruitment plans. The falling oil price has also impacted sentiment among energy companies,’ he added. He pointed out that advertising giant WPP, whose performance is a useful barometer of how much companies are either cutting costs or spending, said in October firms were feeling risk averse due to geo-political concerns. Rival Publicis said there had been an ‘unusually large’ number of clients postponing or cancelling campaigns. ‘Adding to the sense of a weaker global economy, speculation has grown that the European Central Bank is likely to extend or increase its quantitative easing programme in December in order to stimulate inflation. Against this backdrop, demand for prime rental property has slowed,’ Bill explained. The largest monthly drops were a fall of 2% in South Kensington and a decline of 1.2% in Chelsea, two areas where demand has been traditionally strong among financial services tenants. However, Bill also pointed out that despite these near term uncertainties, the UK economy is performing strongly and the longer term outlook is positive. ‘London will remain one of the most attractive places on earth to do business,’ he concluded. Continue reading
