The roll-out of a vaccine for Coronavirus could dramatically change the poor rental market performance in prime London in the coming year, a leading agency claims.
Knight Frank says the optimism, increased travel and return of corporate activity that the vaccine would allow could reverse the factors that have led to the prime London market suffering badly in 2020.
The agency’s latest market snapshot demonstrates the problems currently afflicting the capital.
It says higher supply and weaker demand have dominated prime London lettings this month.
This meant that average rents finished the year down 11.9 per cent in prime central London and 9.8 per cent in prime outer London.
The agency says supply has been pushed higher by a glut of short-term rental properties coming onto the market due to the pandemic.
Demand from international students and corporate tenants has also been weaker due to Covid-19 and associated international travel restrictions.
The impact of this supply/demand imbalance had started to weaken over the summer but tougher lockdown measures in recent months, including a second national lockdown in November, pushed rental values down for second time this year.
Knight Frank adds that what is also apparent is that central London has been more impacted than outer areas including south-west London, where a stronger sales market means fewer rental properties have come onto the market.