Prime central London rental values flat for second month in a row

Taylor Scott International News

Rental values in prime central London were flat for the second consecutive month in December as a seasonal year end slowdown and the impact of global economic uncertainty dampened demand. Though monthly growth slowed to zero by the end of the year, the annual increase in rental values was 3.3%, which was the highest rate in three years, the rental index from Knight Frank shows. It points out that annual growth has been climbing steadily since July as the UK economy improved and some buyers switched to the rental market while political uncertainty surrounds the outcome of the general election in May and the prospect of further property taxes remains. ‘However, while the UK’s economic indicators have improved, caution surrounded the world economy in the last quarter of the year, including falling oil prices and the economic outlook in China and the euro zone,’ said Tom Bill, head of London residential research at Knight Frank. ‘The result is that companies or individuals are more likely to postpone decision making while they wait for clarity,’ he added. The report points out that other factors affecting the market include the falling price of oil, events in Syria and Hong Kong, the Ebola outbreak and concerns the Federal Reserve in the United States was going to raise interest rates sooner than expected. ‘Despite this uncertain global economic and political backdrop, prime central London residential property remained a sound investment in 2014,’ said Bill. ‘Total returns, which include rental income and capital value growth, outperformed a series of other asset classes in the year to November, proving its resilience as an investment. For example, while commodity prices have fallen markedly, partly due to concerns over the Chinese economy, demand among Chinese tenants and buyers for prime central London property has increased, buoyed by its safe haven appeal,’ he explained. ‘This is underlined by the fact the number of Chinese tenants increased by almost fourfold in 2014 compared to 2013,’ he added. Continue reading →

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