Back in May we suggested that the prime rental market in London was due for a recovery though given the challenges of the pandemic, it was hard to pinpoint exactly when that would be.
Since then, life in the capital has moved on apace.
Green shoots emerged during the second quarter of this year, with the first positive quarterly rental growth since Covid struck. That continued in Q3, with a rise of 2.9 per cent – the strongest quarterly growth for more than 10 years.
By the summer the number of new applicants registering with our London offices had hit record levels, and internet registrations remain at record highs as tenants reset their focus on the capital.
One of the drivers has been the workplace. With many firms heading back to the office, there has been an uptick in demand from young professionals and sharers. And as travel restrictions ease, many corporate relocations that were on hold during the pandemic have returned in full force with demand at least 10 per cent above the average pre-Covid levels over August and September, and numbers continuing to grow.
But high demand is only part of the story. Stock levels have undergone a dramatic U-turn over the course of the year and there’s now a shortage of supply, presenting new opportunities for landlords and investors. Such is the scarcity, we are seeing corporate relocation searches that cover the whole of London in a bid to find somewhere suitable.
And in the capital’s super prime sector, where tenants may themselves own a number of properties across the globe, lifestyle rebalancing is fuelling a desire for homes that are increasingly hard to find. For some wealthy residents, renting in London is a flexible lock-up-and-leave piece of the live/work jigsaw, and competition, or the wish to avoid it by renting off market, is driving rental values upwards. Properties commanding £5,000+ per week have seen strong annual growth; rents are back to pre-pandemic levels and in some cases competitive bidding is pushing rents above the guide.
Over the third quarter of this year, 94 per cent of our agents in London reported reduced availability and all reported seeing competitive bidding. For much of prime London, stock is now limited not only for larger family houses but across multiple price points and property types. This supply and demand imbalance will help support rental growth across the capital.
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