Letting agency Knight Frank has identified an opportunity for landlords to cash in on a supply shortage - but only if they own some of the world’s most expensive properties,
Knight Frank’s latest data on the London super-prime lettings market, which lets at £5,000 per week or more, shows that demand has accelerated while supply has fallen sharply.
The result is that London has become a landlord’s market. Average rental values in prime central London rose by 2.8 per cent in the three months to September, the largest quarterly increase in a decade.
The agency’s Tom Smith comments: “I’m not sure clients and investors have woken up to the size of the opportunity in the short-let super-prime market in London. Irrespective of budget these searches are often really tricky given the lack of high-calibre turnkey options in the market geared towards stays of 30 to 90 nights. We’ve had a £20m penthouse on our sales register that has sought to take advantage of this market whilst they look to attract a buyer. When it was made available for short lets there have been very limited periods when they have struggled to find tenants.”
Knight Frank says rental supply is low because some owners sold in order to capitalise on a resurgent sales market over the last 18 months, producing fewer so-called accidental landlords.
In addition, demand for high-value lettings property has been driven by the desire for more space following lockdowns while some sectors of the global economy, including finance, have flourished, further driving tenant demand.
Smith adds: “A number of people in London were affected by flooding, which produced a spike in tenants needing a rental property for six to nine months. On top of that, people came back from holiday, there was a seasonal rush ahead of the schools re-opening and all that was happening just as international travel was kicking back in.”
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