Rental prices vary depending on the property’s location, size, number of bedrooms or even its condition. But a recent study has revealed that the occupancy of global tech giants in certain areas also affects rental prices on residential properties.
The research, which studied the current cost of renting in areas near the offices of global tech companies Google, Amazon, Facebook and Microsoft, has seen a surge in residential rental prices since the establishment of each company’s office.
Surging average rental prices
In comparison, residential properties located in the boroughs where the tech giants moved into have a 44% higher rental cost than the London average. The study also found that the presence of these tech giants drove a 4.7% rental increase in the boroughs, a figure higher than the whole of London’s average rental increase of 1.7%.
So…which boroughs are affected?
One of the most affected areas is the London Borough of Camden.
Google’s move to Camden in 2016 is reported to have the most significant impact on the residential rental prices in the recent years. Since their move, a whopping 9.2% increase on average rental cost has been recorded. During this time, the rental increase in London as a whole was only 0.8%.
Rental costs of residential properties surrounding Google’s office lies around £3,200 which is 32% higher than whole of Camden’s average of £2,427.
Another tech company which affected the rental increase in London’s residential properties is the e-commerce giant Amazon.
In 2017, Amazon opened its office in the London Borough of Hackney which pushed the average rental cost in the area to increase by 4.7% and reach £3,413.
This increase was found to be 86% higher than the average rent across the whole borough.
Although two tech giants Facebook and Microsoft moved into Westminster, the borough still remained to be the most tenant-friendly among the areas occupied by the four tech giants. This was due to a relatively low increase on its rental prices and a much lower rental cost compared to the whole borough.
On the same year when Facebook moved into Westminster, rental prices went up by 4.5% which is higher than London’s average rental increase of 2.9%.
While average rental cost in Westminster is £2,838, the area surrounding Facebook’s office is 39% cheaper than the whole borough.
Implications on renters
Global tech giants moving into London signifies a positive contribution to the country’s economy as it offers more jobs to people and draws more people in the area, thus increasing the demand for the rental market. This will eventually increase the value of residential properties.
However, a surge on rental prices can be seen as a disadvantage by some, most especially renters already living in these boroughs who cannot afford increased rental costs. As a result, existing residents may drive out.
In addition, upward pressure on rental prices suggests a higher incidence of house sharing among professionals and even an increase on accidental landlords.
Written by Heidicel Serrano