Across all the major world cities, corporate demand plays a key part in the prime rental markets. This is particularly evident in prime London where nearly half of all tenants are renting due to employment relocation.

A growing market

Over the past decade, the private rented sector has become a significant part of the London housing market. The number of households in the sector grew from 14% of all dwellings in 2001 to a quarter of all dwellings by 2011. We expect this to rise further to 34% by 2021, though some London boroughs already exceed this figure.

In the central boroughs of the city of Westminster and the Royal Borough of Kensington and Chelsea, the proportion of households renting is closer to 40%. These prime central London rental markets are the most expensive and well established and were traditionally the key locations sought after by corporate tenants.

Beyond the core


However, the prime housing 
market in London has expanded, growing organically along the so-called wealth corridors that run down to the South West and up to the North; and has extended eastwards along the banks of the Thames, propelled by regeneration.

This expansion has provided corporate tenants with a much wider choice of prime properties and locations. At one end of the scale, the east of City rental market is primarily one or two bed flats occupied by individuals or couples working in Canary Wharf or the City. At the other end, there is the more family orientated market of four and five bed houses in south west London.

From around the world

Demand for prime rental properties in London is predominately international. Across all prime London, 63% of tenants come from overseas and in the corporate relocation market that figure rises to 77%. In this market, the largest tenant nationality region is Western Europe, accounting for 34% of tenants.

North American tenants come in third place behind the UK, accounting for 20% of tenants. This is a contrast to the sales market where they are not a significant buyer group, indicating a preference for renting. The remaining 23% of tenants come from a wide range of locations, from Pacific Asia to Latin America as shown in Graph 1.

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Rise of tech

Traditionally, the financial and insurance services sector has been the key sector in the corporate relocation market. In 2007, 50% of tenants worked in this sector, dominating the market. However, following the credit crunch and 
the effect it had on this sector, we have seen a fall in corporate tenants from the financial and insurance sector, now accounting for just 39% of the market.

The industries which have risen up the corporate tenant rankings are information, technology and telecommunications and media and advertising. This follows the growth of Tech City in the east and the more recent regeneration of Kings Cross. Both locations have attracted large international companies such as Google and with them come the tenants relocating from abroad.

What’s next?


Across the UK, the employment market is continually improving. In a survey by Deloitte of chief financial officers, over 80% are planning to increase their hiring ‘somewhat’ and a further 1% will increase it ‘significantly’ over the next 12 months. This will especially benefit London, which is forecast to account for 28% of the UK’s growth in employment over the next five years, resulting in an increase of 368,000 employees.

Rental values across prime London have remained stable over the past three years, seeing very little growth. However, over the first half of this year improved demand, particularly from the corporate family market, has led to a rental growth of 1.4%. We expect an average growth of 2.5% in prime London rents over the course of this year and a total growth of 20.4% over the five years to 2018.

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How does London compare to other world cities?

Corporate relocation is a key driver of 
many of the rental prime markets of the world’s top tier cities. Like London, these cities have large financial and business services sectors, internationally mobile workforces, and established prime rental markets to serve them.

Five cities, namely New York, Hong Kong, London, Paris and Tokyo all have average weekly prime rents of around £2,000. High by global standards, these cities are among the world’s most important centres of global commerce and enjoy a strong tenant demand base for prime residential stock.

In fast growing, high supply Dubai and Shanghai, weekly rents stand at under £800, while Sydney would appear good value by world standards, at under £700 per week.

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Taken from
Spotlight: Corporate Lettings 2014