In October, London’s residential rents fell for the first time since June 2009.

London’s investment market, according to London-based Knight Frank, has generated good returns for investors over the last two years. Until gearing, overall annual returns have averaged 18.2 percent for those bold enough to enter the market in the months following the Lehman crash two and a half years ago. qatar real estate

The effect of the weak pound attracting international buyers; London’s safe haven status, which has been strengthened by global political and economic instability, most notably the Arab Spring and the Eurozone crisis; and London’s economic recovery following the 2009 recession have all boosted investment returns.

Highlights of the report: Prime London residential rents dropped by -0.1% in October, the first drop since June 2009.

Despite the drop last month, rents rose by 0.6 percent in the three months leading up to October.

In Q3, the most recent full year, rental growth was 0.9 percent.

Since the post-crash low in June 2009, rents have risen by 27%.

Prime London rents are still near all-time highs, and are 2% higher than the previous high point in March 2008.

Stock volume is increasing, with a 36 percent annual increase in new orders.

The number of new tenant registrations and viewings has increased by 15% and 31%, respectively, indicating that demand for housing is increasing.

Because of the strong demand from tenants, landlords have been able to raise rents at each break and renewal date. The strength of the central London job sector has been a key factor in this phase. Redundancies in the financial sector are putting that power to the test. Morgan McKinsey, a specialist City recruiter, confirms that work openings in London’s financial services industry were 22% lower in October than in the same month last year.

Although main demand and supply statistics are currently all pointing upwards. There is a notable disparity between supply and demand growth, with new property instructions up 36% in the three months to October compared to the same span last year, and new tenant registrations up just 15%.

Tenant viewings have increased at twice the pace of new tenant registrations, indicating that tenants are more interested in taking their time visiting properties and are not feeling pressured into taking the first unit they see.

Although Knight Franks’ Liam Bailey was correct when he said last month that “the recent steep rise in rents will come to an end during the final quarter of 2011,” he does not believe that rents are about to reverse sharply. Bailey maintains that positive rental growth will occur in 2012, but it will likely be limited to 4% to 5%, similar to annual earnings growth, which he believes is a fair and sustainable outlook for the prime London rental sector in the medium to long term.