Tag Archives: crisis
Prime house price growth in London slows as buyers lack urgency
Price growth in London’s prime residential markets has continued to slow over the past three months as buyers are in less of a rush, new research suggests. Caution first seen in the central London markets early in 2014 has spread to markets in other more domestic prime London locations, according to latest analysis from international real estate adviser Savills. At the same time, the prime regional and country house markets lost some of the momentum seen in the first half of the year and values in both prime London and prime regional markets grew by an average of just 0.5% in the quarter with gains in some parts of the market being offset by modest price falls elsewhere. ‘Despite an improving domestic economy, the effect of the higher rates of stamp duty introduced in 2012 is still being felt particularly around the £2 million mark and was compounded over the summer months by the Scottish referendum and ongoing discussions around a mansion tax,’ said Lucian Cook, Savills UK head of residential research. The continued slowdown in growth means that annual price growth in the prime markets of Chelsea, Belgravia and Knightsbridge averages just 3.3% having flat lined in the last three months. By contrast, slightly less expensive central London markets such as Notting Hill and Kensington have shown quarterly price growth slightly in excess of 1% in the quarter, taking year on year growth to 10%. Elsewhere in London, prices were all but static in the prime markets of south west London, a band that runs from Fulham to Richmond and Wimbledon and south through Wandsworth, as prices rose by just 0.1% in the quarter. ‘These affluent domestic markets were the star performers of 2013, with 14% growth, but now look fully valued to buyers who are constrained by more stringent mortgage lending criteria and looming interest rate rises,’ said Cook. ‘Instead, it is the markets of Islington, Canary Wharf and Wapping that have proved the most resilient, having seen double digit price growth in the first nine months of this year despite a slowing in the traditionally quieter summer period,’ he added. The report also shows that beyond London other prime urban markets such as Oxford, Cambridge and Bath have benefited from a flow of London wealth with prices rising by 1.2% in the quarter and 7.6% in the past 12 months, although this has not been replicated elsewhere. The slowing in the prime markets of southwest London has slowed price growth along the wealth corridor in locations such as Cobham, Esher and Weybridge, while an entrenched price threshold around £2 million has reduced the price growth in the country house market. In the £2 million plus market beyond London prices rose by just 0.1% in the quarter, leaving annual price growth at just 3.8%. ‘In line with our forecasts, it is now becoming clear that taxation… Continue reading
London’s Midtown saw highest levels of commercial rental growth in first half of year
Midtown experienced the highest levels of rental growth of any central London office market in the first half of 2014, according to new research by IPD and Farebrother. Offices rents in Midtown increased 5.9% in the six months to June 2014, ahead of the West End and The City, which posted growth of 5.6% and 4.7% respectively. Data from IPD and Farebrother shows that rents in Midtown, which exceed £70 per square foot at prime buildings, now exceed pre-2008 levels by 1.3%. The unparalleled rental growth in Midtown, driven by a strong occupational market, is pushing capital forwards and the data shows they grew 9% in the first half of the year alone. This was comfortably ahead of the central London average of 8%, albeit marginally behind the West End, where values increased by 9.5% over the same period. Capital values have been the key driver of performance in the Midtown office market, where returns surged to 11.1% in the first half of 2014, almost double the performance posted in the same period last year. This is set against a backdrop of central London Offices delivering a return of 10.6% for the same period, with only the West End, perennially Europe’s best performing market, delivering superior returns at 11.4%. ‘Midtown is central London’s most over-subscribed office market. The demand/supply imbalance means that availability is likely to drop below 4% at some point,’ said Alastair Hilton, head of investment at Farebrother ‘The strength of the occupational market is really driving rental growth, and we are seeing leasing deals being done at unprecedented levels on prime assets. This is really underpinning performance throughout Midtown, where returns have increased significantly since the same period last year. The challenge for investors is the lack of liquidity in the market set against an increasingly competitive background,’ he added. According to Colm Lauder, IPD senior associate, Midtown has proven to be a strong location for investors since the central London office market started to recover, leading investor total returns for six of the quarters in the last two years. ‘Over the past five years, capital values and rents have been on an upward trajectory in Midtown, driven by robust occupier demand across a broad spectrum of industry sectors,’ he pointed out. ‘Given these market fundamentals, Midtown will remain one of central London’s most compelling investment propositions for the foreseeable future,’ he added. Continue reading
London’s Mayfair once again becoming top prime market
Mayfair has not always justified its status as the premier address on the London Monopoly board but it is now on track to be a prestigious location again. Construction of its mansions and garden squares began in the early eighteenth century and what was once farmland became London’s most exclusive neighbourhood. However, the Second World War dented its desirability as a residential district, with businesses moving to Mayfair because their offices in the City had been destroyed and in recent decades, as post-war temporary office permissions expired, properties have been converted back to residential use. However, according to research by international real estate firm Knight Frank there is a more profound change underway. The premium nature of the development pipeline indicates a step-change taking place in relation to quality and pricing in Mayfair. ‘With achieved prices for the best new build schemes approaching, and in some cases exceeding, £5,000 per square foot, Mayfair is on track to regain its status as London’s premier address and merit its position of supremacy on the Monopoly board,’ said Knight Frank’s tom Bill. He added, that in addition to an abundance of Michelin starred restaurants and five-star hotels, Mayfair’s reputation for exclusivity derives from the high number of private member’s clubs, embassies, Royal residences and high-end shopping streets. ‘Mayfair has not had a residential pipeline with such an overwhelming focus on quality for several decades. It is symptomatic of how developers are addressing the increasingly stringent demands of buyers in prime central London, and has led to a step-change in relation to quality and pricing for the best residential property in Mayfair,’ he explained. Also, buyers, particularly in higher price brackets, are less loyal to particular areas of London and have become more product-driven. ‘As more buyers look north of Hyde Park for the right property rather than the right postcode, successful Mayfair developers are combining the cachet of the area’s name with the sort of exceptionally high-quality finish and services that buyers demand,’ said Bill. Indeed, according to Knight Frank, the percentage of all £10 million plus sales in central London over the last year, underlining how the pace of sales is accelerating to a greater degree in Mayfair than in Kensington, Knightsbridge or Belgravia. Mayfair, Knightsbridge and Belgravia form the trio of super prime markets in prime central London. However, Mayfair’s exclusive origins, global reputation for luxury and premium development pipeline give it a particular cachet among buyers that is likely to rise. Continue reading
