Data from property investment consultancy London Central Portfolio suggests foreigners are returning to the UK capital as travel restrictions ease - and that's good news for the lettings market.
The EU represented the largest share of new tenants in Q3 2021 at 36 per cent, says LCP. Just 20 per cent of new tenants in Q3 2021 were from the UK in comparison with 42 per cent in Q3 2020.
However, ongoing travel restrictions resulted in a smaller proportion of new tenants from Asia-Pacific.
As professionals started to return to the office post 'freedom day' on July 19, tenants from the accounting, banking and financial industries represented the highest number of new move-ins at 41 per cent, says LCP. In the prior year, this figure was 19 per cent.
In this latest survey, high net worth students were strongly represented at 26 per cent.
In prime London, Marylebone was the hotspot during Q3 2021 with nearly 40 per cent of enquiries for properties in this area. Tenants now prefer close access to green open spaces in addition to restaurants, shops and a short daily commute. Marylebone, with its central location, proximity to Royal Parks and busy High Street delivers this balance.
One-bedroom properties were in particularly high demand during the third quarter. Over 50 per cent of enquiries were for these smaller apartments. This trend is a result of professionals returning to the city as offices re-open and a greater desire of tenants to have their own space. Properties with three or more bedrooms attracted the least interest.
Andrew Weir, chief executive of London Central Portfolio, comments: “LCP reports significant improvements in the lettings market for prime London in Q3 2021. Increased void periods and reduced rental income plagued the market over the last 18 months due to the global pandemic.
“However, the recent positive results signal a turning point and the return of London as a global destination of choice for employment and education. LCP received nearly triple the number of enquiries for properties in its letting portfolio in Q3 2021 compared with the same quarter last year.
“Our lettings results demonstrate that when people are permitted to travel, London is high on their priority list. The City of London remains a huge draw for those within the financial industries, representing 41 per cent of new tenants.
“Despite continued travel restrictions in South East Asia, HNW students still made up over a quarter of all new tenancies.
“The nature of a residential rental portfolio is that market changes take time to filter through, as existing tenancies run their natural course. During Q3 2021, rates significantly improved on all key metrics including rent levels agreed on both new tenancies and re-lets.
“Overall, we saw unprecedented demand for small one and two-bedroom apartments presented to a high standard and positioned within areas that offer a short walk to green open spaces, amenities and employment hubs.”