Savills: Prime Residential Markets Winter 2008
Further job cuts in the City over the remainder of 2008 and 2009 mean we expect rental values in central London to fall by -7% from their peak, predicts the latest Savills‘ market report.
- The rental market in prime central London suffered at the hands of the weakened employment outlook in the City which led to a reduced demand for rental property. For the first time since 2003, rental growth across prime central London was negative, falling by -1.4% by Q3.
- So far this year and particularly more recently, activity has been strongest in the lower price bands with applicants who are employed in the financial sector choosing to rent. High levels of demand coupled with additional supply from buyers unable to sell their properties, is likely to keep rental growth in check over the coming months.
- The most vulnerable part of the market and where the downturn in corporate tenants has been most acutely felt is in the super-prime sector. This is the
sector where corporate tenants, often relocatees in the financial sector, have enjoyed big employer-paid subsidies in the past but are now suffering cutbacks.
Rents in this sector fell by -2.6% during the third quarter.
- Properties at the top end of the market (the ultraprime sector) recorded a rental rise in value over the third quarter of 0.7%, taking annual growth to 4.1%.
Demand remains strong within this price band although tenants are becoming increasingly price-sensitive.
*The rental market falls into three tiers; mid-prime (average £1,250 per week), super-prime (average £3,000 per week) and ultra-prime (average £4,000
per week).
Download the report HERE.
