PCL ghost town feel exacerbated by corporate tenants seeking value

The Specials’ 1981 song “Ghost Town” has been reverberating around and around my head of late, as more and more stats and anecdotes seem to indicate that “Fortress Central London” is emptying of actual residents – both owner occupiers and tenants.

Over thirty years ago (when I started doing this) it was 80:20, with domestic buyers dominating. It’s not far off the other way around now. This isn’t a huge problem and despite various Government attempts to boot them out, from non-dom taxes, annual levies to swingeing SDLT, they are still buying here.

The problem is that none of them are living here.

Most areas of Knightsbridge have failed the milk and newspaper test for years, and why should owners care – they’re never here to need them.

The big difference between this year and last year, though, appears to be that corporate tenants are now eschewing central London and are happy to consider Battersea, Fulham and Wandsworth as worthy of their presence.

Maybe they’ll save on porters?

If you consider the eye catching Battersea Power Station development (talk about a bloody ghost town – it seems the sellers are actively encouraging a “do not live here” policy – maybe they’ll save on porters?) and the US Embassy, it’s not surprising people are thinking about it. BUT, this is promoting even more of a “lights out” feel in the centre.

Part of the problem is that the changing face of the corporate tenant doesn’t seem to faze PCL landlords. Two reasons; many, especially Chinese, buying new-build are happy to bubble wrap and sell in pristine condition at some point in the future.

Secondly, for many, capital growth is so good that they simply don’t have to let unless they get a figure that makes it worthwhile. Take a flat worth c. £850k a year ago, that’s now worth £950k. The capital growth alone is equivalent to almost £2k a week and there’s no wear and tear.

So if you combine people parking money, buying to let, pied-a-terres, holiday homes, second homes, buy-to-bubble wrap, with companies not willing to pay central London rents – and that’s assuming tenants want to live in areas becoming less characterful by the day – and it shouldn’t be any great surprise that people are worrying about the future of central London.

This blog first appeared on www.primeresi.com