Prime Central London Prices Up Rentals Down - Knight Frank

Prices in Prime Central London (PCL) have risen 68% in past 5 years.  But rentals have not kept up, in fact they have declined in the past 2 years, though it may be bottoming out.

Prices Go Up, Rentals Come Down
What do you make of this? Yields are definitely dropping to the floor. The again, do yields matter?
Yes, to a normal retail investor looking for consistent positive cash flow, especially when you need to service a mortgage.

No, if you are so rich you are just looking to park your money in a safe haven.

However, buying in PCL doesn't work for us because we are looking for rental yields and not just parking money in a safe haven.  Read more in this blog post.

Properties in Prime Central London - A Different Asset Class
We think that properties in Prime Central London are an asset class on its own. Look at it this way. There are an estimated more than 100,000 ultra high net worth individuals in the world, defined as investible assets of more than US$30 mil. The number goes up exponentially if you drop this figure down to US$20mil or even US$10mil. All these people can easily afford some type of property in PCL.

If they are looking to diversify and park their money in a safe haven, them London PCL would be one of their main choices.

Not to mention, the rich and famous also like to have Central London House.  Apparently Beyonce & Jay Z bought a £5 Mil House in Mayfair this April.

The following are screenshots of Knight Frank's reports.

1) Prime Central London Sales Index

Look at the price index for the past 2 years.  Consistent upward trend.

2) Prime Central London Rental Index

Look at the last column - monthly change.  Almost all negative.  The 3 month change %, all negative.  Note that these is a price index, i.e. against absolute prices. Nothing to do with rental yields.

Happy Investing!