Sector Overview - Central London Real Estate Market

Transcription

1 MarketInsight spring Curzon Street, London, W1J 7TF

2 Demand for London s most prestigious properties remains as strong as ever, operating in a market all of its own. GARY HERSHAM, DIRECTOR Market update As predicted by Beauchamp Estates, 201 began with something of a frenzy of activity in prime central London. Given the outperformance of the prime London market in 2012 (1.% growth in Kensington and Chelsea values compared with 1.7% growth nationally), we feel confident that 201 will continue to be even more dynamic. Global uncertainties remain, but in terms of prime central London the market remains strong and buoyant. Measures anunced in the Finance Bill in December 2012 clarified the position for n-natural persons (i.e. a company purchase). The increase in stamp duty from 5% to 7% for individuals purchasing properties in excess of two million pounds has been absorbed into the financial landscape. We are continuing to see a confident market place, demonstrated by a substantial rise across our markets, with Belgravia and Knightsbridge, despite heavy competition from other prime central London locations, remaining the hot spots. Testament to the unashamed appeal of London, overseas purchasers continue to flock to secure a holding in one of the world s safest investments and remain the driving force behind the market, particularly at the upper end. Property owners in the prime central London market come from across the world, attracted to London for its cultural diversity, ecomic and political stability and rewned financial institutions. Continued weakness in the pound has further boosted the attractiveness of investing in central London. Those benefitting from the exchange rate include Singaporean buyers purchasing a property in central London who today will find it cheaper than five years ago. The strengthening of the Euro against Sterling, has added to the appeal of central London property which remains at an all-time high to the European buyer. In particular the French and Italians dominate the market, t only relocating here but buying substantially for investment purposes. The domestic market has also been buoyed up by relaxed lending boosted by the launch of the Funding for Lending Scheme in August which has reduced the lending costs of financial institutions. Mortgage approvals are rising and the Council of Mortgage Lenders forecast a further rise in lending in 201. Although many buyers in prime central London are cash purchasers, recently released Census data shows that around 8% of owner occupiers here are using mortgage finance to buy their properties. The figures range from around 0% in Kensington and Chelsea to 6% in Notting Hill and Holland Park. The super-prime market of central London was the star performer of We saw some exceptional property sales in 2012 across the prime central London area. In the market over 10 million the average price paid per square foot rose by 16.8%. Buyers at the very top echelon of the market would w need to pay an average of about,000 per square foot to obtain the finest properties. Encouragingly, the number of sales in this price bracket rose by 1% compared to 2011 levels. Looking ahead, demand for the most prestigious addresses - and in particular trophy houses seems unstoppable. It is likely that this end of the market will continue to outperform over the course of 201. International London An analysis of the recently produced Census data shows the international influence of the residents of prime central London. Just under a fifth of residents in South Kensington, 18% of those in Knightsbridge and 16% of those in Mayfair have a second address outside the UK. This compares with an average of just 2.7% of Prime central London market in 2012 compared to 2011 TRANSACTIONS AVERAGE PSF ACHIEVED Residents with second address outside the UK 15% 0-5% - Under 2m 2m 5m 5m 10m Over 10m The chart shows the percentage difference in transactions and average price paid per square foot for properties sold in prime London in 2012 compared to 2011 by price band. 0% South Ken Knightsbridge Mayfair Kensington Chelsea Belgravia West Brompton St John s Wood Notting Hill / Holland Park Hampstead The chart shows the proportion of residents for each local area who have a second address outside of the UK according to the 2011 Census. LONDON

3 London s appeal as an international investment % OF OVERSEAS RESIDENTS MOVING TO CENTRAL LONDON FRANCE 12.% 0.2% ITALY 10.% -2.1% 8% 1.2% SPAIN 5.% -1.% GERMANY.% 0.9% GREECE.0% -6.0% REST OF EUROPE 19.6% -0.% USA 7.7% 2.% US $ 6.5% AUSTRALIA 5.9%.% HK $ 5.8% SWEDEN CHANGE IN THE VALUE OF CENTRAL LONDON PROPERTY IN THE LAST 5 YEARS IN LOCAL CURRENCY UK.1% AUS $ -11.% EURO 18.2% ASIA NEWLY INDUSTRIALISED 0.9% 1.8% RUB.1% ASIA DEVELOPING 8.% 6.6% SING $ -10.%.% 5.2% 10.8%.2% MIDDLE EAST Source: DWP, IMF, Rightmove % CHANGE IN GDP, 2012 & NORTH AFRICA REST OF WORLD residents across London as a whole. This reflects the truly cosmopolitan nature of the Capital. Families here speak a rich variety of languages. After English, Arabic is the mostly widely spoken language amongst families living in Westminster, according to a recent survey and in Belgravia, Russian is the second most spoken language. French and Italian dominate in South Kensington. The attraction of both its garden squares and the proximity of The Lycee draw French purchasers to the area. The area proliferates in French, Italian and Spanish restaurants and cafés, lending the area a continental air especially on a sunny day. Indeed London is seen as the sixth largest French city. campaign, a number of France s wealthy individuals have already moved overseas to more efficient fiscal regimes with London proving a popular choice, where they can feel truly at home. Indeed, an analysis of all overseas residents moving to central London in shows that 12% moved from France alone. The number of French nationals resident here is only expected to expand as President Hollande presses ahead with recently contested plans to introduce a 75% upper income tax rate. Since the introduction of the government s flagship As a result there is a new wave of luxurious developments at various stages of the construction process. These include a number of small developments for example in the West End we have successfully been marketing three New development The influx of wealthy overseas buyers to central London and increased demand for high-end luxury new developments has spurred developers to build in this lucrative market. stunning contemporary new-build penthouses, constructed by a small private company. In Chelsea we have also been marketing three new build spectacular freehold houses in Pond Place, (asking prices in the region of 10,250,000) and constructed by our clients Morpheus - a young dynamic duo who truly understand the contemporary mindset. We recently tested the far eastern markets of Singapore, Hong Kong and Malaysia with an initial release of a small number of units being constructed on one of the primest and largest sites in Islington and immediately concluded more than forty sales. We have since agreed the sale of all the penthouses in the development and will revisit the Far East in the autumn with Stage Two of the project. The most spectacular of developments is the restoration of eight grade I listed houses in Cornwall Terrace, Regents Park. Recent Government anuncements On 2th January, the government anunced new planning measures to come into force in Spring 201, enabling office space (B1(a)) to be converted into residential (C) without the need for planning permission. The new permitted development rights legislation is currently time-limited for a period of three years and local authorities will be given an opportunity to seek an exemption should they feel that the changes would have an adverse effect on the local ecomy. Both the City of London and Kensington & Chelsea are reportedly among those seeking to opt out of this legislation although exemptions will only apply in exceptional circumstances. New rules on EPC s as of January 201 any Grade I or II listed property is exempt from requiring an EPC, theoretically because too many of the energy efficiency improvements likely to be recommended will t be permitted under the restrictions that arise from its listed status. This rule does t apply simply if the property is in a conservation area.

4 RECENT BEAUCHAMP ESTATES INSTRUCTIONS AND SALES FOCUS ON BELGRAVIA AND EATON PLACE Eaton Place - significant property sales FLAT HOUSE BEDROOMS 16 PROPERTY NUMBER 12m 10m m 81 m m 2m POA 915 sq ft Freehold An opportunity to purchase this magnificent property. One of the few newly built houses in Belgravia since the Second World War. SOLD JUNE SEPT APRIL SEPT FEB NOV MAR JULY JAN JUNE JULY JUNE Belgravia is our home Knightsbridge, our shop as one of our favourite clients frequently tell us. PENELOPE COURT ASKING PRICE 15.95m 651 sq ft Freehold A stunning contemporary penthouse, overlooking the gardens of Chesham Place. To many, Belgravia is still perceived as the number one spot in the number one capital of the world. The brainchild of the Grosver family, the area was developed in the 19th Century to provide the highest quality homes for the wealthy. Today, the grand squares and terraces of stucco houses remain some of the most sought after and expensive real estate in the world. Sales prices within SW1X (Belgravia) averaged 2,095 per square foot in 2012 (despite a number of these being short-leaseholds), the highest of any postcode district in the country. Strong demand for homes in Belgravia, both from within the UK and abroad, has seen prices increase by 55% over the last five years. As such, Belgravia is the focus of a significant proportion of Beauchamp Estates business and, of course, the Eatons are perennial favourites. Eaton Place, located in the heart of Belgravia to the rth of Eaton Square, is lined with grand stucco terraces. Whilst initially built as impressive family homes, today homes in Eaton Place have largely been converted into flats, although the desire to return to a single family house remains strong. Prices on Eaton Place reflect the desirability of the street, with flats sold in 2012 achieving an average sales price of 1,97 per square foot. Deals done by Beauchamp Estates in Eaton Place over the last few months, include a large unmodernised house and the best part of ather unmodernised freehold. We recently sold a huge penthouse to a French buyer, in neighbouring Eaton Square. Interestingly we first showed him the flat two and a half years ago, and after investigating the market, realised that this was the only address for him. On the other hand, a first floor flat in Chesham Place also sold to a French buyer who exchanged and completed in a mere eight days! SOLD There were 21 flat sales in 2012 with prices ranging from 1. million (for a 1 bedroom flat with a relatively short lease remaining) to 6.15 million (for a long leasehold four bedroom flat). The highest price per square foot paid was over,200. A three bedroom flat has already sold in 201 achieving over 2,600 per square foot. With 10 properties currently available for purchase on the street, we can expect an influx of new residents into Eaton Place in m 176 sq ft 7 years remaining on lease Beautifully appointed raised ground floor lateral apartment in what is widely regarded as London s premier address m 22 sq ft 205 years remaining on lease An unusual and spacious bedroom upper triplex apartment with vast atrium allowing sunlight to flood throughout the flat.

5 SOME OF OUR PRIME RENTAL PROPERTIES Prime Rents The size of the private rental market in London has grown significantly over the last decade alone. In 2011, a quarter of London households rented privately, up from 15% in 2001, boosted doubt by the increased constraints to homeownership. However, it is in the core, most central areas where the importance of the private rental market is most prounced. According to recently released Census data, over half of households in Mayfair w live in the private rented sector with Knightsbridge and South Kensington following close behind. In a similar vein to the sales market, the rental market of central London continues to attract wealthy tenants from all over the world and primarily from the Middle East, Russia and other CIS countries, for both business and leisure. Highly accessible London often acts as a base for US executives conducting business across Europe, and with its substantial expatriate communities, London is seen as a welcoming, cosmopolitan destination to live and work in. Wealthy families originating from countries such as Saudi Arabia or Qatar, appreciate the London weather in the summer time! Also, the plethora of highly-desirable pied-à-terres, with roof terraces available to rent and with parking and luxury services, in the heart of prime Mayfair and Knightsbridge, appeal to this well-heeled market. South Kensington and Chelsea enjoyed a particularly strong year in 2012 with average rents achieved rising by 6.%. This rise in rents came despite a 1% increase in the number of properties made available to let over the course of the year compared to popular choice for French nationals, has in particular benefited from France s proposals for a tough new tax regime for the most wealthy. At present, demand is focussed on the 5,000 10,000 per week market segment and we expect that as we move into spring and summer, super-prime properties for between 12,000 and 20,000 per week will become increasingly sought-after. Indeed, the super-prime sales market enjoyed a strong year in 2012 with an increase in transactions as overseas investors and occupiers sought to pour their wealth into the Capital s real estate. It is perhaps of little surprise therefore that a number of these properties have found their way into the lettings sector. Knightsbridge, SW7,900/week Available to let through Beauchamp Estates In 2012, central London saw a 70% increase in the number of rental properties made available for over,000 per week over 2011 levels. As an indicator of the strength of demand at this end of the market, despite this increase in supply, rents continued to rise. Properties let over,000 per week achieved rents on average 5.1% higher in 2012 than those achieved in Chelsea, SW1,500/week Available to let through Beauchamp Estates We fully expect rental values in prime central London in 201 to maintain and possibly even exceed their 2012 high, with further growth in 201. We would also expect outperformance in the sales market once again in 201 as demand for the most prestigious London addresses continues unabated. Mayfair, W1,250/week Available to let through Beauchamp Estates High net worth international tenants remain the key driver of demand. South Kensington, a Size of private rented sector by area, % Rental market over,000 in prime London % SUPPLY OF PROPERTIES TO LET % CHANGE IN RENTAL VALUES % 200-0% 0% 0 M ay Kn fa ir ig ht sb So rid ut ge h Ke ns in gt on Ke ns in gt on Ch els St ea Jo hn s W oo d Be lg ra via Ha m ps te N ad Ho ott lla ing nd H il W es Park l / tb ro m pt on LO ND O N 0% Source: 2011 Census Chart shows the number of properties made available to let for more than,000 per week along with the annual change in the average weekly rent achieved for properties let over,000 per week in prime London.

6 ABOUT BEAUCHAMP ESTATES Beauchamp Estates is a firm privately owned by Gary Hersham and Penelope Court with more than thirty years of experience in both the residential and commercial markets. We have specialist skills in acquiring and selling prime central developments and super-prime houses and flats. The dynamic market which London has enjoyed over the last three decades has enabled the firm to create a successful and enterprising company. The two partners have worked together since the late 1970 s, giving them a sense of continuity rarely experienced by their competitors. Their enthusiasm and dedication has resulted in a client list that reads like a global who s who of buyers and developers alike. The firm is instrumental in achieving sales in the order of one billion pounds per annum. Beauchamp Estates operates in Mayfair and St John s Wood in London, Cannes in the South of France, the Island of Mykos in Greece and its new office in Florence in Tuscany, Italy. LONDON FRANCE GREECE ITALY 2 Curzon Street London W1J 7TF rue des Etats-Unis 0600 Cannes France Rohari Mykos Greece Lungar Benvenuto Cellini 25/C - Firenze Italy All data, analysis, editorial and design, supplied by Dataloft Disclaimer: This report is produced for general information only. Whilst every effort has been made to ensure the accuracy of this publication, Dataloft Ltd accepts liability for any loss or damage of any nature arising from its use. At all times the content remains the property of Dataloft Ltd under copyright and reproduction of all or part of it in any form is prohibited without written permission from Dataloft Ltd. Date of publication: March 201 SPRING 201