Tech hubs push up rental prices

You’d be forgiven for thinking that relocation to the UK was set to nosedive in the wake of the BREXIT vote but we’re pleased to report that interest in UK headquarters is still strong.

We’ve written before about the influx of social media innovators and tech giants choosing the UK and now another name can be added to the list. Snap – the parent company of message service Snapchat – is moving its international headquarters to London’s Fitzrovia, no doubt bringing with it American talent. Snap joins Apple in Battersea Power Station, Google in King’s Cross, Twitter in Soho, and Facebook and Instagram, both also in Fitzrovia – household names showing faith in our island.

It brings us on to the matter of tech hubs and residential property. If you’re resettling professionals – whether within the UK or from overseas – expect clients to pay more in rent if they’re requesting accommodation in the same neighbourhoods as tech companies.

In fact, the upwards trend is already being noted. Leading UK estate agent Kay & Co analysed data from Cambridge, Reading and Oxford – locations where tech firms have flourished – and found the local housing markets flourished too, rising in value by up to 60% in five years. The estate agency now predicts the same may happen in Fitzrovia, Soho and King’s Cross.

 “Rental values in Fitzrovia, Bloomsbury and Soho averaged £659 per week for flats and £1,025 per week for houses in Q2 2017. We are predicting growth over the coming years, especially as there will be a long-term supply of good quality, high earning, job-secure tenants in these key areas,” explains Martin Bikhit, the Managing Director at Kay & Co.

Although London’s prime residential market has taken a hit of late, a u-turn may be on the cards with bubbling microclimates are already starting to form – notably around tech clusters. This sentiment comes as monthly rents in London rose 0.6% in October 2017 on a year-on-year basis – perhaps the start of some momentum. “Tech firms tend to have a very international payroll and when they relocate to the UK from elsewhere or set up a new office, they tend to bring overseas staff with them, fuelling demand. These companies also have a habit of choosing ‘ahead of the curve’ locations, which are initially quite affordable in terms of rent but soon explode in popularity and cost as people flock to live in close proximity,” comments Alex Hancock from Klippa Relocation.

Bikhit from Kay & Co does add that there is a pocket of affordability in the tech sector, found in Battersea. There is an oversupply of homes in this South London neighbourhood, to the tune of 20,000 in the planning – far outweighing the 2,000 Apple staff that will move in – and driving rental prices driven down as a result. This, however, may change as the new American Embassy at nearby Nine Elms comes close to completion in 2017 and the residential enclave establishes itself as a desirable location.

If part of your relocation package involves securing rental accommodation in the UK’s employment hot spots, talk to Klippa Relocation today. We have property agents and orientation schemes running in all the major cities and towns across the country.

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