London rentals are on the rise, according to statistics released by the real estate firm Savills. The report indicates that property investors around the world consider London the place to be, with international buyers – western Europeans in particular - comprising a large proportion of growth in the London rental market.
A recent slump saw the London rental market fall 1.9% in 2013, but it has recovered nicely with a 2.9% rise in the first half of 2014. The prime central London market, as expensive as one would estimate properties in this area to be, is attracting a lot of interest with Canary Wharf and Wapping in particular showing signs of becoming new rental hot spots in the capital.
Economic growth and burgeoning job market play a role
Rental market growth in London’s heart is seen as a reflection of economic growth occurring throughout the UK. According to Let Britain, international students account for 75% of those looking to rent in London, but young professionals pursuing career opportunities in the UK also make a significant contribution.
The financial and insurance sector in London is responsible for the majority of job opportunities that draw international tenants to the capital, but the professional, media and communications sector looks set to become a major contributor to job market growth in the future; potentially furthering growth in the rental market as more professionals arrive to advance their careers.
According to Property Wire, prime London areas showing noticeable growth include:
- St. Johns Wood and Hampstead, which have seen rent increase an average of 2.2%, primarily due to low availability of family homes.
- South west London, where flats and smaller properties have seen stronger annual growth than houses.
- East of city markets like Canary Wharf and Wapping, which have seen average rent rise 3.1%.
Canary Wharf in particular is emerging as a rental hot spot, with an average cost per square foot of £27, compared to £40 across the whole of the prime London area. Its proximity to City airport and public transport facilities, as well as its wide selection of gyms, restaurants and shopping centres, make it an attractive spot for working professionals and a showcase for what the London city lifestyle has to offer.
Tony Usher, associate director of residential for the JLL Canary Wharf office, claims that the high demand for rental properties makes it an appealing location for investors. This in turn has prompted an upsurge in residential development, with over 1,200 units currently under construction, 360 of which were started during the second half of 2013.
The arrival of the crossrail in 2018 will further enhance the appeal of a district that continues to evolve from an area meant primarily for commercial property development into one that offers a variety of opportunities for property investors.
If you're looking to benefit from London's burgeoning rental market, whether as a tenant or a property investor, don't hesitate to contact the experts at Tepilo for professional advice on the intricacies of the London property market.