LONDON (July 29): One of central London’s newest luxury neighborhoods isn’t as exclusive as you might think.
Rental growth in Nine Elms, the area surrounding the iconic Battersea Power Station where hundreds of new apartments are sprouting up, is struggling to keep pace with the city’s prime locations. Prices per square foot have fallen by 15.7% in the past year, far more than the 9% average drop in other expensive areas, according to research by LonRes.
Many of the properties are owned by investors, who face a double whammy of oversupply of properties and rental weakness due to coronavirus. When the pandemic froze the property market for much of the second quarter, rents in the south London area slumped 6.1% on an annual basis, following a rise of just 0.5% in the first three months.
Some of the most expensive London areas including Nine Elms, have seen a 50% surge in rental properties coming to market in the past year, according to Marcus Dixon, head of research at LonRes. That’s not being met by sufficient demand, leaving tenants in a strong position to negotiate rents, he said. The challenging market isn’t helped by a surge in people working from home and fewer expected overseas students this year.
Tenants in Nine Elms were paying average rent of around 547 pounds (US$709) a week in the second quarter, versus 854 pounds in upmarket districts.
Mostly built in the 1930s, the Battersea Power Station was left derelict for decades before Malaysian investors acquired the site in 2012, to convert it into mostly residential and office space. Demand for rental properties at the site, which is one of a number in the Nine Elms district, has held up well amid the pandemic with the number of empty units in line with typical levels, according to a spokesperson for Battersea Power Station Development Co.