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Annual rental growth in prime London property sector falls back

Property Wire
Annual rental growth in prime London property sector falls back - London - rental property

Annual prime London property rental growth has slipped back into negative territory for the first time in two years, down 0.4% year on year, according to the latest Savills prime rentals index.

It reflects weak short term prospects in the financial and business services sector and is despite a rise of 2.35 in the first six months of 2012.
‘The financial sector has long been the lifeblood of the prime London rentals market and rents have struggled to limp past their pre Lehman peak,’ said Lucian Cook, director of Savills research.

‘The profile of tenants has changed as a direct consequence of weakened sentiment, with a notable decrease in big ticket tenants employed in the financial sector in the prime central and east of City markets of Canary Wharf and Wapping. As such, there are a number of new and increasingly localised market forces being seen in the capital,’ he added.

Prime central London values remained flat over the past three months, while values are down 0.5% year on year. Stock levels have increased as overseas safe haven buyers brought their investments to market, easing supply constraints and suppressing rental growth.

The safe haven effect has also impacted the upper end of the market which remains 5% down on peak. Traditional high net worth occupiers looking to shelter wealth have been inclined to buy rather than rent, while those continuing to rent have focused on iconic, fully serviced buildings, meaning the ultra prime market has become increasingly selective.


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