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Jun 30, 2012

London prices are rising, but rents are weak, except at the top

			Last Updated: Jun 30, 2012
PRIME CENTRAL LONDON - Flats	COST (£)		YIELD (p.a.)	PRICE/SQ.M. (£)
PRIME CENTRAL LONDON - Flats	TO BUY	MONTHLY RENT	YIELD (p.a.)	TO BUY	MONTHLY RENT
50 sq. m.	679,750	2,216	3.91%	13,595	44.32
85 sq. m.	1,209,465	3,212	3.19%	14,229	37.79
120 sq. m.	1,846,200	5,284	3.43%	15,385	44.03
175 sq. m.	3,262,175	10,486	3.86%	18,641	59.92
300 sq. m.	8,326,800	n.a.	n.a.	27,756	n.a.
LONDON - Flats (other luxurious areas)
60 sq. m.	785,820	2,524	3.85%	13,097	42.06
90 sq. m.	1,132,470	3,272	3.47%	12,583	36.35
120 sq. m.	1,422,360	4,565	3.85%	11,853	38.04
200 sq. m.	2,910,000	n.a.	n.a.	14,550	n.a.
Districts researched: Prime Central London: Belgravia, Brompton, Chelsea , Kensington, Knightsbridge, North Mayfair Other Luxury Areas: Buckingham Gate, Hanover Square, Notting Hill, South Kensington, South Mayfair, Regent´s Park, Hampstead Heath, St. John´s Wood, Pimlico, Earls Court, Marylebone, Savile Row, and Bayswater Source: Global Property Guide Definitions: Data FAQ See also: Update Schedule

“Prime Central London property prices rose 0.8% in June 2012, contributing to the annual growth of 10.5%”,notedthe Knight Frank Prime Central London Index. This is roughly in line with the latest Global Property Guide survey of upscale properties, which has a slightly different base. We observed a 16% growth in per square metre (sq. m.) prices of 120 sq. m. flats in Prime Central London during the year ending to June 2012.

GBP 1,800,000 was the average price in June 2012 for a 120 sq. m. flat in Prime Central London or around GBP 15,000 per sq. m.
That compares to last year’s average price of GBP 1,600,000 for a 120 sq. m. flat, or around GBP 13,000 per sq. m.

Rental incomes, on the other hand, have generally gone down. During the year ending to June 2012:

Monthly rents per sq. m. of 85 sq. m. flats dropped 10%, or a loss of around GBP 375 in monthly rental income
Monthly rents per sq. m. of 120 sq. m. flats dropped 7%, or a loss of around GBP 400 in monthly rental income

Larger flats however showed the opposite tendency. Rents per sq. m. on 175 sq. m. flats increased by 12%, or a gain of around GBP 1,100 in monthly rental income.

“The upper end properties buck the slowdown in rental activity as they are much less affected by job losses and budget cuts for corporate relocations”, noted the June 2012 Knight Frank Residential Market Update.

Unsurprisingly, average gross rental yields are lower this year, ranging from 3.19% to 3.91%, as compared to last year’s rental yields, which ranged from 4.31% to 4.36%.

The same property trends can be seen in other luxurious London areas. Prices per sq. m. have risen, while rents per sq. m. and gross rental yields have dropped (our research divides central London into ‘prime central London’ – i.e., the super-luxurious districts, and ‘other luxurious areas’).

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