Demand for luxury property in London is “storming ahead” and stronger than it was before the economic crisis, according to research released by the Centre for Economics and Business Research (CEBR).
CEBR research revealed that 1,387 houses were sold last year for more than £2 million, compared with 1,297 in 2011. Sales of homes with a price of more than £2 million had also increased by 14.5 per cent since the peak level of 2007.
The average price of a luxury London home reached £3.75 million last year and is expected to rise to £3.81 million this year. Out of the ten most expensive houses sold in London last year, the average price was £25.3 million, compared with £14.5 million the year before.
Prime residential properties currently on the market in London include an eight-bedroom house in Hampstead on the market for £49 million, for which you get indoor and outdoor pools, a cinema, library and five reception rooms.
Or, there is an eight-bedroom home in Mayfair available for £39.5 million. Located just off Berkeley Square, this property has a two-storey reception hall and a classic sweeping staircase leading to the eight bedrooms, a 17-metre swimming pool, gym, steam room, sauna and beauty treatment suite, and shower room.
Thirdly, how about a £45-million five-bedroom house in Regent’s Park – another terrace mansion along the road went for £80 million earlier this year. It comes with a separate business entrance that opens into a grand study and PA area, and has views of the Shard and London Eye from its roof garden, which has an open air Jacuzzi.
Foreign investors have snapped up 65-70 per cent of new-build homes in prime London over the past two years, according to research by one of the capital’s leading property agencies.
This international appetite has allowed the new-build sector to remain buoyant, with average new build residential prices in London rising by 56.3 per cent between Q1 2009 and Q2 2013, according to Chesterton Humberts.
As well as Chinese, Russians and citizens from the Middle East buying for lifestyle reasons, there is now evidence that buyers from these countries are now also purchasing primarily for investment purposes. New nationalities becoming more active in the London property market have also been identified, including Nigerians, French and Greeks, due to political strife, economic difficulties and tax threats to personal wealth.
London’s established safe haven status, combined with its legal transparency and the good long term performance of its property market, means that it features on many international buyers’ wish lists. Price growth has been particularly strong over the past few years with Nationwide reporting that average new-build capital values have risen by 47.7 per cent since 2009, while the average premium for luxury new build property in London can be anything from 10 to 15 per cent and in some cases considerably higher.
Chesterton Humberts’ Head of International Residential Developments, Samuel Warren, highlighted that there was £2.2-billion of investment in luxury new-build homes last year and expects this figure will be exceeded this year: “With demand for prime new build properties set to remain robust and new supply struggling to keep up, we expect investment volumes will be higher this year than last. The relative weakness of sterling means that many overseas buyers can achieve effective discounts on purchase price whilst acquiring an asset that will almost certainly appreciate considerably over time and which they will have little difficulty in selling when the time comes.”
France’s harsh tax regime and struggling economy means that interest in London property among French people continues to grow, so that the French population in the capital has increased by 75 per cent over the last ten years.
There is also evidence that East London is a growing hot spot, says London property consultancy Hamptons, so that the French population there is now 85 per cent of that in West London, the area traditionally popular with wealthy settlers from across the Channel.
The capital’s biggest proportion of French people lives in Kensington and Chelsea, where they account for about four per cent of the total population in the borough, compared with an average for London of just 0.5 per cent. South Kensington in particular is a popular and established community – often dubbed the ‘21st arrondissement’ – with French schools a tribute to the commitment to staying in the UK.
But French communities are now growing in other parts of London too. As house prices in the SW7 area become out of reach, the French are moving to other areas where house prices are lower. French schools have sprung up in Clapham, Camden, Ealing and Fulham to accommodate this trend.
But what is more surprising is the growing popularity of East London to the French – now a hot spot for growth in London’s French population. Tower Hamlets – home to Canary Wharf and Spitalfields – has a French population three-and-a-half times higher than 10 years ago.
Similarly Hackney and the City of London have seen the French population almost triple. Indeed, the combined population of French people in these three boroughs is 85 per cent of that in Kensington and Chelsea. The French now account for about one per cent of the overall population in these three boroughs, still well above the average for French in the capital as a whole.
Marylebone is an exciting part of London, not just for its vibrant neighbourhood and many attractions, but also as a promising part of the city for investment, thanks to prices there rising more than any other area in prime central London (PCL) in the last quarter.
But Marylebone won’t remain a hidden gem for long, as 60 per cent of sales there last year were by international buyers, according to leading international property agency Savills. Encouragingly, Marylebone’s mews houses have risen in value 10 per cent between 2009 and 2012.
A typical mews house currently in demand will be finished to an excellent standard with a contemporary feel and tucked away on an attractive cobbled cul-de-sac mews. A popular area is between Montagu and Bryanston squares, offering easy access to all the amenities of Marylebone as well as being close to Hyde Park. Plus, for enjoying the nice weather without going to the park, the most sought after mews homes come with a roof terrace.
Elsewhere, Marylebone has some grand apartments, complete with high ceilings, large windows, plenty of period features and lots of wow factor. An attractive area, ideal for a swish city pad is Harley Street, which gives good access to Marylebone High Street, Baker Street and Regent’s Park.
Marylebone also has buy-to-let investment opportunities. Blocks with two or three-bedroom apartments are available there, many perfectly placed to generate great levels of rent, as well taking advantage of Marylebone’s rising values. Look for investments that are close to Regent’s and Hyde parks, as well as Baker Street and Marylebone stations, for maximum rental appeal.
Property prices in prime central London (PCL) continued to rise in July and now stand almost 60 per cent above their financial crisis low in March 2009, according to a leading London property agency Knight Frank.
Property prices in PCL increased again in July, up by 0.5 per cent month-on-month. This means that so far in 2013, prices for the very best homes in London have increased by 4.2 per cent. In spite of new record prices, interest among prospective buyers remains high, as property viewings in PCL over the year-to-date are up by 15 per cent compared to the same period in 2012, said the agency, adding that the number of new applicants is up by a similar level. Rising demand has translated into higher sales volumes, up by 8.2 per cent year-on-year.
Key factors driving price growth and interest include the city’s reputation as a safe haven for investment, the strength of global equity markets and the value of the pound. The further weakening in Sterling in the first half of 2013 helped to boost overseas interest and domestic demand has been aided by London’s economic recovery and arguably from the Government’s Help to Buy scheme, which was launched at the end of Q1 this year.
While Help to Buy, with its £600,000 valuation cap is a more significant factor in the wider mainstream market, rising housing market sentiment is infectious across markets and price brackets, and is likely to act as a positive influence in terms of future pricing even in London’s prime market segments.
There remain differences in performance between locations and price bands across PCL. In July, property in the sub-£1m bracket increased in value by 1 per cent, while homes in the £1m-£2.5m price bracket climbed 0.6 per cent. Comparatively, the price of ‘super prime’ £10m+ homes remained unchanged over the course of the month.
In Marylebone for example, where property values have climbed by 4.7 per cent over the year-to- date, interest and activity in the sub-£3m market has been the primary driver of these price rises.