With the return of workers to the office and the resumption of corporate relocations and international travel, London’s core rental market is leading the recovery for the first time since the start of the pandemic, with prices recording the strongest quarter of growth since March 2011 (+ 2.9%), according to the latest Savills analysis.

In particular, the return to the capital pushed rent growth in central London up 3.6% in the quarter, outpacing quarterly growth in the main suburban belt. Not seen since before the pandemic either.

Across London, blue chip rental prices are now up 1.6% year on year – with a number of popular family home locations in the South West including Wandsworth (+ 7.3%) and Wimbledon (+ 6.1%), experiencing significant price increases over the year.

Q3 2021

All London top notch

PCL

North West

South West

Where is

Northeast

Quarterly growth

2.9%

3.6%

1.0%

2.1%

1.9%

4.2%

Annual growth

1.6%

1.2%

0.0%

5.0%

1.4%

-1.0%

Growth over 5 years

-5.0%

-14.4%

-6.9%

2.6%

-0.5%

-3.1%

Source: Savills Prime London Rental Index, Q3 2021

Return to work effect: apartments outperform houses

The apartment market has also started to recover, with price increases for prime London apartments outperforming houses in the quarter for the first time since December 2019 (+ 3.2% vs. + 2.5% in the third quarter). In particular, properties without outdoor space are starting to rebound – with growth up 3.5% over the last three months – overtaking properties with gardens (+ 2.4%).

This is in part due to a shortage of inventory, which causes tenants to compromise on their wish lists in order to secure a lease.

In the main suburban seat belt rental markets, city growth is now 8.0% up over the year, more than villages (+ 6.8%), cities (+ 6.6%) and rural areas (+ 6.5%).

London’s top homeowners raise their price expectations

The return of office workers and students means the North and East London hotspots – particularly Shoreditch and Clerkenwell – are seeing the highest quarterly growth – at + 9.6% and + 7.4%. Push prices to recover over the year (Shoreditch -0.5% and Clerkenwell + 0.4%). Here, the number of prospective tenants jumped 27% in the third quarter, although there is still a week left in September.

Due to the significant increase in demand in all types of properties and locations, almost all agents in London are now reporting a shortage of stock (94%) – with almost three-quarters (72%) of agents stating that the shortage is significant.

Amelia Greene, Director of the Premium Rentals team at Savills, commented: “The return of international travel, combined with a complete relaxation of restrictions, has sent the premium rentals market into a frenzy.

“Demand is on the rise across the board – and almost all branches are posting tenders. Hot spots in north and east London have been particularly popular due to workers’ desire to come to the office. on foot and the return of the students to the capital.

“In some cases, tenants make sure they are the most attractive candidate by paying for a full year in advance, or by committing to an invisible real estate site. As a result, we’ve seen a huge pendulum swing in favor of landlords and almost all landlords. Expect rental prices to rise. Now is the time to put a property on the rental market. ”

Outer suburb locations surpass London suburbs

Rents for prime suburban belts are now up 6.8% over the year, as tenants anticipate the continuation of hybrid working methods.

Outdoor commuter locations saw the strongest growth in the quarter, with Henley (+ 3.2%), Windsor (+ 3.1%) and Cambridge (+ 2.6%) leading the way. Suburban locations and those in the inner London suburbs, such as Tunbridge Wells (+ 12.8%) and Sevenoaks (+ 9.4%), continued to experience notable annual increases.

Amelia Greene continued: “Locations in the suburbs of London have seen exponential price growth over the past year, due to high demand from tenants leaving the city in search of more space. Now we’re starting to see the number of applicants go down and Central London locations are increasing. However, a severe shortage of inventory will continue to support higher prices in the near term. ”

Rental outlook: pandemic real estate trends are here to stay

Despite a return to normal and more workers returning to their desks, private outdoor space (72%) and space to work from home (66%) continue to be among the top two priorities for top tenants, ahead of proximity to transport (53%) and the workplace (31%), according to agents.

“The easing of pandemic restrictions – including international travel and a significant increase in demand from businesses and students – over the past three months has played a major role in the upturn in the quality rental market,” comments Jessica. Tomlinson, Research Analyst at Savills.

“But as prices pick up, tenants’ attitudes and ownership preferences have definitely changed. Many tenants may be willing to forgo proximity to their workplace and a good schooling for a private garden and more space to work from home, which will continue to impact areas. of London are experiencing the strongest long-term growth.

“Although it is in its early stages, the outlook is positive for more central locations. We expect an even stronger return to rental growth in the capital for the remainder of the year and to a stronger rebound in 2022. ”

Disclaimer

Savills plc published this content on September 28, 2021 and is solely responsible for the information it contains. Distributed by Public, unedited and unmodified, on September 28, 2021 11:31:04 AM UTC.

Leave a Reply

Your email address will not be published.