Strutt & Parker and its retained economic advisors Volterra are predicting 2.5% growth in Prime Central London (PCL) lettings prices in 2015, indicating that the rental market will remain robust despite the current uncertainty in the sales market.
Strutt & Parker and its retained economic advisors Volterra are predicting 2.5% growth in Prime Central London (PCL) lettings prices in 2015, indicating that the rental market will remain robust despite the current uncertainty in the sales market.
Strutt & Parker’s latest figures show that there were 2,093 lets agreed in PCL in the final quarter of 2014, which although 18% below the five year quarterly average, is far above the level of lets seen in the 2007 peak.
Zoë Rose, Head of London Lettings at Strutt & Parker, said: “In 2015, we hope to see a boost of activity levels and slow but steady growth in prime London lettings. The rental market is calling out for an injection of fresh stock which has started to come to the market, in particular refurbished lateral apartments. As investors continue to convert their assets into properties, we anticipate supply easing, with more properties coming to the rental market – and the early signs are that this is already happening.”
“We believe that this trend will continue all year as prime property owners place greater focus towards the rental option. Before rentals were often seen as the last choice, simply a back-up option, which is why there was such a shortage of prime rental stock that came to the market last year. The next few months will determine whether this change is set to continue, with the bonus of giving the niche tenant greater choice in this elite rental sector of the market.”
“There were 12,000 rental transactions in prime central London in 2014, up from just over 10,000 five years ago – so the market is in good shape when you look at historic figures. The number of people out there that enjoy the flexibility of renting at the high-end – global, nomadic types who we refer to as Glomads – definitely seems to be growing.”
In the sales market, headwinds look set to continue into the first half of 2015. Whilst UK assets remain an attractive position at present, and this looks set to continue as the UK economy continues to grow, uncertainty over taxation change due to the looming election are placing considerable uncertainty on this market.
Andrew Scott, Head of London Residential at Strutt & Parker, said: “The PCL sales market is feeling the full impact of buyer caution ahead of the Election, with the strongest activity at the very top end of the market above £5m and at the other end below £2m, where the financial impact of Mansion Tax is less relevant, or indeed irrelevant.”
Strutt & Parker defines PCL as Knightsbridge, Belgravia, Chelsea, South Kensington, Fulham, West Chelsea, Kensington and Notting Hill.
View the full London Residential Quarterly Report - Q4 2014.
Properties featured:
Cambridge Place, W8 £4,750 pw
Lansdowne Road, W11 £4,500 pw
St Leonards Terrace, SW3 £5,950 pw