Taylor Scott International News
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. Taylor Scott International
Taylor Scott International, Taylor Scott
