Rents in Mayfair and Knightsbridge got hit by China
Top property consultancy Knight Frank on Thursday released its Prime Central London Lettings Index for August, which tracks the change in rental prices in posh London areas.
The index finds rental growth slowed for the 3rd straight month to 2.5%, while quarterly growth was 0.2%, the lowest since April 2014.
The report features this chart that shows rents in posh neighbourhoods like Mayfair and Kensington appear to track the performance of the FTSE 100.
As a result, Knight Frank are blaming August's poor performance on the Chinese yuan devaluation. Here's the company:
There is a correlation between rental values in prime central London and the performance of the FTSE 100, as figure 2 shows.
The recent stock market dip has been due to concerns over the state of the Chinese economy, with weak manufacturing data and the recent devaluation of the Yuan increasing nerves... The result is more subdued corporate activity and fewer relocation agents currently active in prime central London.
China's jitters may have spooked the ultra-rich, putting a dampener on activity, but it seems a bit of a stretch to link it to the FTSE 100.
After all, its performance doesn't even correlate that closely with the rental market. The match that's most striking is the decline in 2009 - when the FTSE 100 was pulled down by a property-linked financial meltdown.
Still, it does at least highlight that, at the top end, London's property market is in a world of its own, one where the performance of the Chinese yuan is more likely to affect prices than proximity to the tube.
Here's Knight Frank's breakdown of what happened in August to rents in each area it deems "prime":
