DLR Only Line To Buck The London Underground Pandemic Rental Values Decline

DLR Only Line To Buck The London Underground Pandemic Rental Values Decline
pierre9x6 / Pixabay

The latest property market analysis by London lettings and estate agent, Benham and Reeves, has revealed that all but one line on the London Underground has seen rental market values fall as a result of the pandemic and the resulting reduction in demand from London tenants.

Get The Full Walter Schloss Series in PDF

Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q2 2021 hedge fund letters, conferences and more

Mohnish Pabrai On Uber Cannibals And Henry Singleton

At the end of October, the value investor Mohnish Pabrai gave a presentation and took part in a Q&A session at Boston College and Harvard Business School on the Uber Cannibal Investor Framework, which he has developed over the past decade. Uber Cannibals are the businesses “eating themselves by buying back their stock,” the value Read More

Impact Of The Coronavirus Pandemic On The Property Market

Benham and Reeves analysed rental values surrounding each station on the London Underground and how they’ve been impacted by the pandemic.

The research shows that in December 2019, prior to the outbreak of COVID-19 in the UK, the average cost of renting around a tube or DLR station sat at £2,215 per month. However, the latest figures show that this average monthly cost has since dropped to £2,007 - a decline of -9.4%.

The Circle line has seen the largest drop of all lines, with the average cost of renting along the line as a whole falling -16% to £2,566 per month.

The Victoria line has also seen a double-digit drop of -11%, down from an average of £2,227 per month prior to the pandemic to £1,982 currently.

The Waterloo and City line (-8.6%), District (-8.1%) and Central lines (-7.1%) also rank within the top five lines to see the largest decline in the average cost of renting as a result of the pandemic.

Just one line has bucked the trend and that’s the DLR. Prior to the pandemic, the average cost of renting along the DLR was £1,647 per month. This has since climbed by 4.5% to £1,721 per month.

The Hammersmith and City and Jubilee lines have seen the lowest reduction in the average cost of renting at -4.1% and -4.2% respectively, while the Met, Bakerloo, Northern and Piccadilly lines have all seen a 6%+ drop.

Director of Benham and Reeves, Marc von Grundherr, commented:

Rental Values Decline Across London

“The close proximity of a tube station has always been a very sought after feature amongst London’s tenants and this convenience has traditionally commanded a rental price premium as a result.

However, with the pandemic forcing many to work from home, demand and rental values have fallen across London as a whole, with priorities shifting towards larger homes and green space as opposed to public transport availability.

The good news is that this downward trend is starting to reverse and as more of us have returned to the capital, rents are once again starting to climb. So while renting close to a tube station still remains more affordable at present, tenants looking to secure a bargain need to act now in order to do so. With many businesses planning a full return to the workplace in autumn, rental values are sure to bounce back imminently as a quick commute once again becomes a sought after rental property feature.”

Table shows the average cost of renting along each tube line and the chance between now and pre-pandemic rental levels

Line Average rent pm - Dec 2019 Average rent pm - Aug 2021 Change (£) Change (%)
DLR £1,647 £1,721 £73 4.5%
Hammersmith & City £2,056 £1,972 -£83 -4.1%
Jubilee £1,974 £1,892 -£82 -4.2%
Metropolitan £1,721 £1,613 -£108 -6.3%
Bakerloo £2,113 £1,976 -£137 -6.5%
Northern £2,106 £1,965 -£141 -6.7%
Piccadilly £1,839 £1,715 -£124 -6.8%
Central £1,846 £1,716 -£131 -7.1%
District £2,163 £1,987 -£176 -8.1%
Waterloo & City £3,637 £3,323 -£314 -8.6%
Victoria £2,227 £1,982 -£245 -11.0%
Circle £3,056 £2,566 -£490 -16.0%
Average of all stations £2,215 £2,007 -£208 -9.4%

Rental values based on the average rent in each station outcode across each line. Data sourced from PropertyData (Dec 2019 - Aug 2021, latest available).

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)www.valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
Previous article 7 Signs Your Business Is at Risk of a Cybersecurity Attack
Next article Biden Defends Decision to Leave Afghanistan, Declares China America’s Boogeyman

No posts to display