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Canary Wharf set for strong rental growth

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As one of the most iconic parts of London, with a skyline that's recognisable to anyone around the world, Canary Wharf is understandably a desirable location to rent.

It's then unsurprising that Knight Frank is predicting such strong office rental growth this year, with the organisation noting that it could be the site of the strongest central London office rental growth in 2016, growing by a total of 12.8 per cent. For interested property investors, understanding why growth is so strong is a good first step before pursuing any properties.

A closer look at the key growth drivers

Interestingly, affordability is actually the primary motivator for growing rents. Knight Frank also pointed out that the development of the Crossrail and integration with the rest of the central city are helping to increase rents.

One of the other significant drivers, according to Knight Frank, is actually a general shortage of office spaces across the wider city. In turn, this means organisations seeking both quality and affordable rent are forced to look at areas like Canary Wharf. 

Bruce Dear, the head of London real estate at Eversheds, explained to the Independent that Crossrail will "make Canary sing". He said that Canary Wharf will become the new West End, as it means the difference between paying £40 per square foot and being 18 minutes away from Mayfair, or paying an £60 per square foot and being two minutes away.

What's happening in Shoreditch?

Knight Frank noted that Shoreditch is likely to closely follow Canary Wharf rental increase this year, growing by 10 per cent. This follows growth of almost 24 per cent in 2015.

Chief Economist at Knight Frank James Roberts said that Shoreditch office rental growth is surprising, especially as they're now so close to those in the central city. 

"Everyone assumed the tech firms could not afford rents that high. However, the more successful start-ups from five or six years ago have matured into larger, established companies with deeper pockets. They now need bigger, modern, high quality offices, and they can afford to pay to get what they want," he said.

Certainly, London is set for a number of interesting developments throughout 2016.

Those considering the feasibility of property in London will want to pay close attention to Canary Wharf developments over the course of this year, especially given the likely effects rental changes will have on other parts of the city.

Date Published: 29 Feb 2016
Category: General News

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