After a stable first half for the residential lettings market in Midtown, City and Docklands which saw static rent levels for two-bedroom
units, there was a return to strong rental growth across the board in the second half of 2011. Rental values for both one-bedroom and
two-bedroom properties saw significant increases (Figure 3). Weekly rents for one-bedroom units rose by 5% from £400 in June 2011 to
£420 in December 2011 while for two-bedroom flats rents rose at the slightly higher rate of 6% from £500 in June 2011 to £530.
Rising rents reflected increased demand which is typical in the second half of the year, but also responded to restricted stock levels
as many tenants elected to remain in situ at the end of twelve month AST leases. Our anecdotal evidence, however, suggested that the
pick-up in rental activity in 2011 was less pronounced than in previous years. In part we attribute this to lower levels of demand
from student renters some of whom have been priced out of the market, especially in Midtown and the City, by rising rents. There has
also been an increase in the supply of purpose-built student accommodation by specialist providers such as Unite and Nido and
an increase in short-term serviced rental operators.
There was also evidence of increased demand at the top end of the market, where apartments and penthouses rent in the range of
£750-£1,500 per week. It is now not unusual for tenants of apartments from Bloomsbury through the City to Shoreditch and
Spitalfields to be paying in excess of £1,000 per week in response to the cachet of City and City Fringe areas as residential locations.
The quality of units in these locations is high and tenants have become less particular about location, opening up a greater choice
of well specified apartments.

From Hurford Salvi Carr