“In prime Central London over the last year, we have seen year on year growth of approximately 11% in Kensington & Chelsea, according to The Land Registry, and price levels now stand at 13% per cent above their previous 2008 peak. Much has been made of the current shortage in stock levels within prime Central London, and it is interesting to note that the number of sales above £1m have reduced to 0.68% of the total London market from a previous high of 1.7% in April 2011. We believe that this current level of turnover will continue into 2012, and whilst we think that the rate of capital growth will slow to approximately 3% in Prime Central London, we do not envisage any deterioration in capital values. We will continue to see the current levels of both domestic and international investment in Prime Central London property as cash rich individuals seek safe haven for their funds.
“Within these straitened economic times “wealth preservation” seems to be the key phrase amongst our clients and if a rental yield of between 3% and 4% can be achieved coupled with annual growth of 2% then at least one is keeping in line with the current rate of inflation. These are, of course, “broad brush figures,” and it is interesting to note that we have recently achieved in excess of £2,000 per sq ft for unmodernised property within key Knightsbridge locations and demand for unmodernised property from developers continues unabated. It would seem developers still have a keen appetite for prime Central London property and obviously see potential for further growth over the next 18 months. Provided London retains its reputation as the financial capital of Europe, I think it is likely that demand for turnkey, well located properties will be sustained throughout 2012 and property within certain garden squares, lateral apartments and eminent houses will continue to surpass the £3,000 per sq ft mark.”
Lucy, senior partner and head of lettings, adds: “The last two months of the year traditionally brings a flurry of activity and interestingly, we are placing more property on to the market than we were this time last year as we have increased our market share across Kensington, Chelsea and Belgravia. The supply of good rental property has stayed tight and demand from prospective tenants has continued with premium rents being paid for the very best properties. Across the country, rents have continued to rise and in prime Central London, competition from tenants has helped push them to record levels. The latest UK monthly average rent has been quoted as £718, whilst in London this has reached £2,075. With the average after tax salary now just £2,721 per month, this leaves £646 for living expenses, and is the reason for people moving further away from Central London or staying in the family home longer.
“Interestingly, however, in our cosmopolitan market here in Central London, we are noticing an increasing proportion of British people renting. At the top end of the market, we recently had three English families bidding on substantial properties in excess of £4,000 per week in Knightsbridge and South Kensington which proves that the British psyche really is changing and veering away from the ‘must buy to build a nest’ mentality. Americans historically dominated the prime Central London market by as much as 70% in the mid-noughties, but this has dropped right down to below 50%.”
Have your say on this story using the comment section below