With residential development forging ahead at sky-high rates, the rental market in Prime Central London is set to go from strength to strength with the addition of luxurious new properties.
According to data contained in the Residential Property Development Analysis of Prime Central London, released by Pastor Real Estate, the amount of stock has risen by 8.6pc since 2009, with over 5,200 new addresses arriving in some of London’s most sought-after neighbourhoods. For investors, this development brings new opportunities as the size and style of these units are suited to families and multiple occupants, a strict departure from the compact properties that have dominated previously.
As the preference has shifted from small pied-à-terre and single-occupancy properties to larger, more spacious units, developers have been quick to meet the demand, creating new opportunities for private landlords in the process.
Opportunity knocks for buy-to-let investors with new PCL developments
There are 86 developments currently in the pipeline throughout PCL, with ground broken 16 of these already.
Looking at the average size of both the units under construction and those in the application stage, it can be seen that bigger is certainly better. Only 88pc of the developments under construction have at least one two-bedroom unit, compared with the schemes in the application phase, in which every single development has a two-bedroom unit.
There is a sharp increase in the number of three- and four-bedroom units too, as more families look to settle in PCL. Of the development schemes in the application process in Mayfair, Knightsbridge, Marylebone and Belgravia, 71pc include at least one three-bedroom unit. Four-bedroom properties, ideal for large families looking to take advantage of the luxurious lifestyle and proximity to world-class schools, have seen an increase in both number of sales and development.
In fact, a proposed development in Knightsbridge features 15 units that all have four-bedrooms or more. Given that a four-bed property in Mayfair currently yields about £7,980pcm in rental income, landlords can expect a generous return on investment along with high demand.
The average size of apartments throughout the area has also risen; studio apartments in the application stage boast an average of 763 sq ft, compared with just 543 sq ft for those currently under construction. The increase in size can be observed in larger properties too, with a development on Marylebone’s Wigmore Street set to have three- and four-bedroom apartments with more than 9,000 sq ft of space each.
With markets across PCL set to receive a sizeable number of large properties in the coming years, the number of available rental units is bound to increase. Investors have long been active in the PCL markets, with a brief slowdown at the top of the year attributed to concerns over Labour’s proposed Mansion Tax. With that fear alleviated, buyer confidence and investor activity has returned, and with so much new stock arriving, there is vast potential to enjoy high returns.
Larger properties naturally fetch higher rental rates, great news in affluent markets such as these. Gross rental yields in this part of the capital are around 4.37pc, and where previously a lack of supply left many would-be buyers out of luck, the arrival of new properties can at last open doors to private investors in PCL.