In a world of political uncertainty, property in central London is increasingly seen as a rock solid investment in the eyes of international investors, according to a number of property surveys that have recently been released. LuxuryProperty.co.uk has broken down these recent reports to provide an analysis of the trends affecting the central London luxury property market.
The value of luxury property in the British capital has shot up 33 percent since March 2009, topping the peak prices enjoyed in March 2008. A monthly increase in April of 1.4 percent was seen in the value of property above £3.7 million, representing a seventh straight monthly increase. The overriding reason for these trends, according to Knight Frank, is the performance of the emerging economies where buyer money is coming from. This is coupled with the fact that since the last price peak in 2007, the pound has depreciated by over 20%, providing unprecedented value for high-end buyers.
The success of high-profile property developments, such as CPC Group’s One Hyde Park development in Knightsbridge, which has closed almost a billion pounds worth of sales already, is material proof that global political uncertainty and currency market performances have ushered in a new wave of buyers from previously unremarkable buyer jurisdictions such as Egypt. Owner-occupied homes are popular as wealthy individuals escape troubled countries with their families, and buy-to-let properties remain strong as affluent British residents increasingly prefer to rent, owing to liquidity issues.
‘London dominates UK’s most expensive streets’
London has once again topped Zoopla’s recent survey of the most expensive property locations in the UK. The figures published on the website’s “Property Rich List” are quite striking. Out of the 6,000 or so streets in the UK where the average home costs more than £1 million, almost 2,300 were in the capital. Guildford, Surrey, came in second with 89 streets, and the smaller town of Cobham, in the same county, third with 78.
The country’s most expensive district in which to purchase a property is the London borough of Kensington, where the average property costs an astonishing £1,737,862. One street, the gated Kensington Palace Gardens, locally nicknamed Billionaires’ Row, was declared the most expensive residential street in the world. The average property on the street costs an astonishing £19.2 million. The street is home to a number of foreign royal families, such as those from Saudi Arabia and Brunei, as well as Britain’s richest man, steel tycoon Lakshmi Mittal, who owns three properties on the street alone.
Nearby Chelsea has an average property price of £1.32 million, whilst a number of West London neighbourhoods top the £1 million mark, among them Notting Hill and Knightsbridge.
Zoopla’s Nicholas Leeming credits the figures to a general British interest in maximizing the value of their properties, and points out the geographical differences in the statistics: “Despite the recent property market uncertainty, Brits remain obsessed with the value of their home as well as those of their neighbours, friends and family. This year’s Property Rich List shows an ever-widening North-South divide and whilst house prices in some of the most expensive areas of the country have fallen a little over the past 12 months, they have held up far better than in many of the less expensive areas.”
‘Asian interest in new-builds’
With the recent doom and gloom of the global property market, it would come as no surprise that new-builds have come to the market in lower numbers than in pre-recession times. However, it appears that London has a captive market of its own for newly built property, namely wealthy investors from Asia (particularly Hong Kong and Singapore). New figures released from agent Knight Frank show that an astonishing 60% of new-builds in London over the past six months have been picked up by buyers from this region, a figure that is bound to come as a surprise to those who have been slow to pick up on the latest buying trends of Asia’s nouveau riche.
Whilst the advent of emerging economies and politically-troubled jurisdictions as the source for a new wave of luxury property buyers arriving in London in well understood, there has also been a lucrative interest from those in higher-performing mature economies, whose buyers enjoy high levels of liquidity and an advantageous exchange rate relative to the pound sterling.
The retention of wealth in the Asian financial centers, coupled with the lack of liquidity among home-grown British buyers in recent times, appear to have attracted unprecedented Asian interest.
Another important factor is the letting potential of luxury central London properties – which, according to Knight Frank, has never been higher, and is growing on an average of 0.6% month-on-month. The weakness of the pound sterling has also been an important consideration for overseas buyers.
The question on many people’s minds will be: how long will it last? According to all the surveys, a peak is not envisaged in the near future. The fundamentals of the luxury property market are too strong, say analysts, and London’s reputation as a relative safe haven, not only for its residents but for property investors far and wide, means that it will remain intact for some time to come.
