London rents are rising, should you buy these stocks - CRN, ESP, RSI?

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London rents are rising, should you buy these stocks - CRN, ESP, RSI?

 London rents are rising, should you buy these stocks - CRN, ESP, RSI?
Image source: Nature's Charm, Shutterstock.com

Highlights

  • Rents in the capital jumped by 12.3% over the last 12 months from £1,680 to £1,886.
  • Rents in Inner London jumped by 22% to £2,513, which is around £500 more as compared to the previous year.

Rents in London are rising at a fast pace as renters who had left the city during the pandemic are returning to work post lockdown, according to the latest Hamptons Lettings Index. Rents in the capital have jumped by 12.3% over the last 12 months from £1,680 to £1,886, the fastest rate since the Hamptons Lettings Index began in 2013.  Around 30% of the properties were rented out to new tenants who were previously living outside of London, according to sales and letting agent Hamptons.

However, rents in Inner London jumped by 22% to £2,513, which is around £500 more as compared to the previous year. Marking a sharp recovery from 2020 when just 12% of tenants in London came from outside the capital.

Around 55% of the tenants this year who are moving into the capital came from the surrounding counties, including Buckinghamshire, Berkshire, Hertfordshire, Essex, Surrey, or Kent, compared to 40% before the pandemic started.

With the rise of remote working because of the pandemic, just 31% of tenants were moving to the capital specifically for the jobs, compared to 40% in 2019. The average rent in the capital stands at 103%, up from 96% in 2021, but down from 120% in the pre-pandemic period.   

Regionally, growth in rents continues to be underpinned by the gap between the demand and supply of homes, with the Southwest of England leading the jump in rents by 13.9% to £1,041 over the last 12 months, followed by London at 12.3%, Northern Region at 9.4% and Midland region at 8.9%. In April, there were 30% fewer properties available to rent as compared to April 2021.

Let us look at 3 FTSE-listed rental stocks.

1.     Cairn Homes Plc (LON: CRN)

With a market cap of £619.55 million, the share value of the Main Market listed real estate construction business engaged in developing, selling, and renting residential properties depreciated by -3.91% over the last one year as of 16 May 2022, while its year-to-date return stands at -7.14%. Cairn Homes Plc’s shares were trading at GBX 88.40, up by 0.80% at 8:10 AM (GMT), as of 16 May 2022.

Also Read: KYGA, ABF, PFD: Stocks in focus as concerns grow over rising food prices

2.     Empiric Student Property Plc (LON: ESP)

With a market cap of £529.61 million, the share value of the FTSE All-Share listed leading provider and operator of modern student accommodation depreciated by -0.56% in the last one year as of 16 May 2022. Its year-to-date return stood at 1.76%. Empiric Student Property Plc’s shares were trading at GBX 87.80, at 8:10 AM (GMT), as of 16 May 2022.

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3.     Grainger Plc (LON: GRI)

With a market cap of £2,197.24 million, the share value of the FTSE 250 listed residential property business that operates around 9,727 total rental homes and around 8,373 are under the development pipeline depreciated by -6.16% over the last one year as of 16 May 2022, while its year-to-date return stood at 4.16%. Grainger Plc’s shares were trading at GBX 296.40, at 8:10 AM (GMT), as of 16 May 2022.

Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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