Prime central London is seeing the rise of the micro-apartment, according to new research, as squeezed accommodation budgets have seen singles and couples opting for location and convenience over size.
According to data analysed by London Central Portfolio there is increasing demand for smaller properties which offer an affordable option for tenants who wish to be centrally located near their place of employment or study.
In a similar dynamic to prime London’s sales market - where luxury properties have suffered most in the face of the changing tax landscape and Brexit uncertainty - LCP says prime London’s rental market is also notably fragmenting by size and price band.
Over the last 12 months, 42 per cent of properties let have been studios or one bedrooms by tenants prioritising lifestyle and transport links over square footage. On the other hand, demand has been notably slower for larger rental properties as families consider less central options, offering greater value and more space.
“Tenants are now looking for more affordable options, choosing central locations and an easy commute to work or university. This is reinforcing the new trend for the globally mobile to seek highly specified micro-apartments, with well optimised space, whilst families tend to opt for more suburban locations where smaller budgets can stretch to larger homes and ideally the possibility of outside space. Indeed, significant discounts to asking rent of over 10 per cent for the most expensive, luxury rentals are now being reported” explains Naomi Heaton, LCP’s chief executive.
It is also taking much less time to find tenants for smaller micro-apartments.
Over the last year, the average marketing times for two-bedroom properties has reached 85 days, increasing to 98 days for three bedroom and a significant 119 days for three-plus bedroom units.
This is 42 per cent longer on average than for one-bedroom or studio units, which are seeing a much greater level of demand from the single tenant and couples that the PCL market attracts. For LCP’s portfolio, 63.9 per cent of tenants are now single dwellers.
Another indication of the trend in prime London towards micro-apartments is the number of properties being rented by price band.
Over 1/3 of properties let have rents under £500 per week whilst only 3.2 per cent of units have been rented over £2,000 per week. Some 70 per cent of units being let now have rents of under £750 per week.