Weekly rents per square foot have risen 23% to £1.13, making it the third most expensive area behind Knightsbridge and Mayfair.
Knightsbridge has slipped behind Mayfair as the number one most expensive area, as rents fell 11% to £1.22 per square foot compared to Mayfair’s £1.31.
Overall rents have increased by 4% in Prime Central London since 2013 while void periods have decreased by 25%.
Naomi Heaton, chief executive of London Central Portfolio, said: “For the last few years, rents in less traditional areas have lagged behind the rapid increase in sales values which have been witnessed as the centre of gravity in PCL moves to locations around main transport links, but with plenty of architectural heritage.
“As gentrification continues, the smart buy-to-let investor will look away from PCL’s trophy locations to the areas with more pzazz, where there is still room for rents to increase.
“Our fourth Central London Property Fund recognises this and whilst acquiring, as always, a portfolio of properties in all the prime postcodes surrounding Hyde Park, we will focus our attention on these up and coming areas.”
Also joining the over £1.00 per square foot club was South Kensington following a 14% increase in average rents, while Pimlico (5%) and Bayswater & Paddington (9%) also reported upturns.
Notting Hill meanwhile has seen weekly rents fall to 93p per square foot.
One bedroom flats achieve the highest average weekly rents per square foot of £1.05, although this is 3% less than in 2013, while rents on two bedroom flats have increased by 8% to 96p.
Three bedroom flats continue to lag behind.
Heaton added: “As the financial sector strengthens and economic sentiment picks up, two bedroom properties are coming back onto the radar as tenant accommodation budgets start to increase.
“LCP’s funds have always targeted small units which appeal most to the mainstream private rented sector, cherry-picking the best one and two bedroomed properties with maximum upside potential.
“Whilst our last fund was biased towards one bedroomed units, the steady-eddy of the rental market in the aftermath of the credit crunch, our fourth fund, London Central Apartments II, will be taking a keen interest in two bedroomed units as they gain popularity once again.”
