Rental values in London exceed pre-pandemic levels – Show House
New research from JLL shows that five central London markets are now seeing residential rental values 7.5% higher than pre-pandemic levels.
The analysis focused on 100 properties in Battersea/Nine Elms, Canary Wharf, Kensington, Stratford and the City of London which had let down before the pandemic, during Covid-19 and more recently. Homes are showing an average drop in rental values across all five markets, from pre-pandemic levels to lows during Covid of -3.6%. Thereafter, all markets showed a strong rebound, with growth from pre-pandemic to current levels ranging from 5.8% to 8.8% and an average of 7.5%.
The onset of the pandemic saw many tenants leave London, particularly students and young professionals. However, once the economy gradually started to reopen, many young professionals began to return to London. Meanwhile, the student market saw an extremely strong comeback in the fourth quarter of 2021, as the easing of travel restrictions combined with the reintroduction of face-to-face teaching, again fostered an influx of international students into the British capital.
Meg Eglington, senior research analyst at JLL, said: “After a difficult first period for the London residential rental market at the start of 2020, our research shows that the recovery is showing a strong rebound in the main London markets, even surpassing pre-pandemic levels. This is partly due to the UK’s vaccination program which has allowed local economies to reopen. Looking ahead to the next 12-24 months, international tenants are likely to be the most influential on market performance. »
Charlotte Russell, Regional Director of Residential Rentals, JLL added: “Some homes in parts of London have been hit by deeper rent declines and -20%/+20% rebounds at times throughout the pandemic. The declines were generally due to government restrictions and uncertainty. Today, the shortage of supply is pushing rental values even further to levels above those seen before the pandemic, up to 50% in some cases. We have never seen such a shortage of rental properties available in central London, which will continue to be an ongoing issue throughout 2022. Cancellation periods are low and properties are generally let out within a from three to seven days, with higher rents”.
JLL predicts strong rental growth in 2022 of 4% in Greater London, while Prime Central London is expected to increase rents by 6%. This will largely be due to the early return of travel by high net worth individuals around the world, coupled with a severe lack of rental housing supply.