International demand hikes Prime London rents
According to letting agents London Central Portfolio Limited, Knightsbridge now commands the highest weekly rents per square foot at an average of £1.27, a 9.5% increase on this time last year.
Mayfair enjoyed growth of 4%, with Belgravia and Kensington holding steady during 2012. These postcodes are all generating rents of more than £1 per square foot mark per week.
Marylebone is catching up with the internationally favoured areas, achieving average weekly rents of 96p per square foot, a 10% rise since this time last year.
Small upturns were also witnessed for Paddington and Bayswater, South Kensington and Chelsea. These areas saw average rental increases of between 2% and 4%.
Areas more popular with British tenants, such as Pimlico and Notting Hill, have been hardest hit by the economic downturn, with average rents falling. Covent Garden was the worst affected area last year, losing 15% to 73p per square foot a week.
The value of property in Prime Central London continues to increase strongly as buyer demand outstrips supply. London continues to attract global wealth, while existing property owners don’t want to to sell their best performing assets.
This is good news for investors as property prices appreciate but the flip-side has been an overall increase in rental stock. Tenants now have greater choice and are able to negotiate harder.
As a result, rental increases are suppressed and re-let inflation has slowed by 50% after sharp increases in 2011, to just 3.4%. Void periods have also doubled from 12 months ago as landlords hold out for the highest possible rents and best overall covenants.
Article courtesy of Mortgage Solutions