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Study shows effect of global tech giants on London residential rents

The presence of some of the world’s biggest tech giants is pushing up London rental prices in properties surrounding their main offices in the capital, a new study suggests.

Lettings platform Howsy looked at the current cost of renting in boroughs home to Google, Microsoft, Amazon and Facebook and how this compares to rent growth since each company opened their office, the overall London average and rental yields on offer.

The data shows that on average, boroughs home to a tech giant are also home to an average rental cost 44% higher than the London average. Westminster is the highest, home to Microsoft and Facebook, with the average monthly rent costing £2,838, some 64% above the London average.

On average, rental prices in these boroughs has increased by 4.7% since these companies have moved in compared to an increase of just 1.7% across London as a whole.

The most notable is Google’s move to Camden where they’ve been based since 2016. During this time rents in the borough have shot up by 9.2% while London as a whole has seen an increase of just 0.8%.

Since Amazon moved to Hackney in 2017, the average rental cost has increased by 4.7% compared to 2.5% in London, with rents up 4.5% in Westminster since Facebook moved in last year compared to just 2.9% across London.

Looking even more granularly, rents surrounding the offices of these tech giants is even higher than the wider borough. With an average cost of £3,413, the rental market surrounding Amazon’s Hackney base is 86% higher than the average rent across the borough.

Surrounding Google’s current campus, the average rent of £3,200 is 32% higher than Camden as a whole at £2,427, while there is a 4%, the gap between rent surrounding Microsoft’s Westminster office and the borough as a whole, but Facebook’s Westminster HQ is the most tenant friendly, with the average rent surrounding it coming in 39% cheaper than the wider borough.

The research also shows that rental yields surrounding all four offices come in below 4%, almost one percent less than the London average of 4.43%.

‘It’s great to see such big names committing to London, and the wider economic benefit they bring through the provision of jobs, investing in their workforce and the surrounding area is a big plus,’ said Calum Brannan, chief executive officer of Howsy.

‘However, the downside of so many additional people being drawn to the rental market is this greater demand causes a spike in rental prices. This creates a further financial obstacle for those living in the area without the benefit of a robust tech-based salary and can see many existing residents drive out,’ he pointed out.