London property prices: Global firms drive demand for prime flats in the capital – but at a bargain
Global multinationals are feeling increasingly plucky about the economic outlook and their future assignments, which is helping to drive demand for prime residential accommodation in the world’s gateway cities such as London and Hong Kong.
However, Knight Frank’s latest research shows they are becoming more price conscious – with their employees being encouraged to seek out better value for money when they rent or settle for the next best neighbourhood.
The upmarket estate agent said that demand for prime accommodation among companies has expanded, with figures Worldwide ECR showing that 45 per cent of global companies expect international assignments to increase.
However rental growth across the world’s 18 key cities has been muted in recent years – rising only 0.2 per cent in the year to June 2015 – due to the increasing affordability squeeze in many locations.
Cape Town, Zurich and Toronto have seen strong growth – up 10 per cent, eight per cent and five per cent respectively – with Moscow dragging the overall index down after recording an 11 per cent drop.
In central London prime rents in the year to June rose on average by 3.4 per cent with areas such as Marylebone and Hyde Park outperforming other areas. That was a slowdown on the four per cent recorded earlier in the year as the General Election dampened activity and more people chose to rent their property rather than sell.
Recent currency fluctuations has made a huge impact on what companies can and cannot afford when located staff overseas. The on-going strength of the US dollar means that US tenants in particular have seen strong savings in rental costs.
For example a US tenant spending the equivalent of $1,000 a week in central London mid-2008 would be paying $800 for the same accommodation now, as a result of currency and market movement. During the same period a French banker renting accommodation on New York would have seen the need for a weekly budget of €1,000 moving to almost €1,500, Knight Frank said.
Here’s a map showing how the cost of two or four bedroom flats in different London neighbourhoods compares and which sectors they attract:
Click or tap on the image to see the image closer-up.
Source: Knight Frank