Salient to Investors:
London rents have risen more than 6 percent in the past year to a record despite employment in the financial-services industry at a 20-year low. Lender restricting mortgages to all but the most creditworthy customers has encouraged individual investors and companies to enter the rental market as central banks push down yields on debt to record lows.
HomeLet said the average rent in greater London is up 32 percent from October 2009 versus rents in the rest of the UK increasing 7 percent between 2009 and 2012.
Manhattan average apartment rent in September was 10 percent more than a year earlier. Berlin average monthly rent in half1 were 13 percent more than a year ago.
Yolande Barnes at Savills said the economy of these cities is strong because they are world cities, and the UK’’s private rented sector is attractive for investors.
In Britain, buy-to-let loans in Q3 were the most since Q3 2008.
JPMorgan Chase said the extra yield bond investors demand above benchmarks to hold the buy-to-let debt fell to 1.55 percent, half the spread in July 2012 and down from 11 percent in June 2009.
Buy-to-let investors are likely to benefit from the Financial Service Authority’s mortgage market reform. Neil Chegwidden at Jones Lang LaSalle said the FSA don’t regulate the buy-to-let market – buy-to-let investors tend to be more affluent, most have more than one property, so you’ve got greater security by writing that kind of mortgage.
Savills said London rents will rise 3 percent in 2012 and 4 percent in 2013, and 26.4 percent in the 5 years through 2017 – 24 percent in London’s best neighborhoods and 18.2 percent nationally. Savills said technology workers relocating from overseas will help protect London’s richest rents from a European finance industry that’s cutting thousands of jobs this year.
Ralph Rosenberg at KKR is considering financing development of rental and for-sale apartments in London, where the market is a lot deeper than just the local market, given the interest from wealthy individuals in the Far East, Middle East and Europe,