There’s been a remarkable 15 per cent leap in average rents achieved in prime central London over the past year, according to the JLL agency.

The figure, as of the end of the first quarter of 2022, is a far cry from the picture 12 months earlier, when rents recorded a 10.4 per cent annual fall.

JLL says achieved rents in the PCL niche are now 3.1 per cent higher than pre-pandemic while stock levels remains far below the average.

The agency says there has been a trickle of new properties reaching the market. There are 71 per cent fewer properties listed compared with the end of the first quarter last year and 59 per cent lower than the 2018 to 2020 Q1 average.

JLL says it expects a return to more normal market conditions over the course of the year. Rents rose 1.1 per cent in the 2022 first quarter, down from a 3.7 per cent quarterly rise in late 2021.

Tenants, who a year ago were able to negotiate significant reductions on asking rents, are facing higher rents on renewal. In some case this is meaning tenants are leaving, however many, who see how competitive the market is, are paying more and remaining in situ. 

JLL data shows an 18 per cent annual increase in the number of renewals across PCL in Q1 2022 compared with Q1 2021.

Marcus Dixon, director of UK residential research at JLL, analyses the prime central London sales and rental markets this way:

“Two years on from the first lockdown we had hoped that 2022 would bring greater stability, allowing the much-anticipated PCL recovery to progress. Sadly, this hasn’t come to pass, with the war in Ukraine, the ongoing impact of Covid-19 and concerns over the rising cost of living all preying on the minds of households. Yet despite a far from certain year ahead the PCL market has again proved resilient.

“We still expect PCL to be one of the best performing markets in 2022, as the resurgence of the city continues.  However, overseas buyers, the return of whom we are expecting to trigger a new wave of activity and price growth in PCL, may take a little longer than hoped to return.

“The PCL lettings market starts 2022 in a very different position. 

“In Q1 last year we had seen rents fall by more than 10 per cent annually and supply levels were still climbing. But a year on and rents are 15 per cent higher than in Q1 2021 and now exceed their pre-pandemic peak. But there are signs the market is settling and we anticipate annual growth in rents will have peaked in Q1. 

“But with supply still below historic levels there could be room for further increases in the coming months too.”