Kevin Murphy takes an in-depth look at the Prime Central London (PCL) Property Market Report 2017

Brexit does not seem to be dampening the spirits of investors for London commercial or residential property. Recent analysis shows that sales in the commercial property sector for London was £20 billion for 2017 thus breaking previous records. Savills reports that buyers were from 27 countries purchasing more than £14.4 billion in commercial property for the first three quarters of 2017.

Stephen Down, executive director at Savills, told the Express:

“UK real estate continues to appeal to a broad spectrum of international investors, while there is also demand from a broad professional investor base so long as properties are priced correctly.”

Also the London Central Portfolio (LCP) is reporting the residential property sector for London is seeing increases in home prices. Their analysis says that the sub £1.2 million prime residential sector has risen 5.6% within the past year. Average prices in this sector are now £822,812 or 15% higher than three years ago. Increases in the prime Central London prices have seen an increase of 7% over the past year but 3.3% lower than 2014.

Naomi Heaton, CEO of LCP, said in the Express:

“We now see signs of recovery as buyers absorb the additional cost of investing into a world class, safe haven asset class.’

“Brexit jitters also appear to be calming down as global political and economic uncertainty makes the UK an attractive place to invest in once more.”

“There may be further volatility to come, particularly with the Autumn Budget on November 22.’

PCL Market Update

The Prime Central Market (PCL) for 2017 has seen transaction volumes remain steady as a result of asking price reductions according to international real estate firm Knight Frank.

For the first seven months of 2017 residential exchanges increased by 5% compared to the same period in 2016.

The London areas of Bloomsbury, Fitzrovia and in particular Marylebone have been the favoured locations for the PCL sector.

Christian Lock-Necrews, Office Head at Knight Frank Marylebone says:

“Marylebone remains in vogue as a place to live, primarily because of its two forward-thinking landowners, The Howard de Walden Estate and The Portman Estate. The area is increasingly a destination in the £10 million-plus price bracket and some record £ per square foot (PSF) prices were achieved in 2017. The larger Georgian houses in particular are incredible value for money compared to lateral apartments.”

Housing in Marylebone for the year to August 2017 is at £1,720 PSF compared to £1,580 in 2015 and £1,270 in 2013 over same period. Maximum £ Per Square Foot for the year to August 2017 is now averaging £5,530 PSF compared to £5,620 PSF for 2015. In 2013 the PSF average was £2,602.

For the £10 million PCL sector, Knight Frank told PropertyWire recently:

‘The average number of viewings for a property before exchange increased to 41 in the first nine months of 2017 from 30 in the same period in 2016, a Knight Frank analysis of London’s £10 million plus market shows.’

‘Furthermore, the median distance travelled by buyers on viewings before an acquisition was three kilometres in the third quarter of 2017, compared to 2.6 kilometres in 2016 and 2.3 kilometres in 2015.

‘In similar fashion to the wider prime central London market, sales volumes above £10 million have slowed since 2014 in response to a succession of tax changes as well as political uncertainty.’For this £10 million property sector the average price has declined by 2.8% for the year to October but is considered an improvement following the 7% decreased experienced in February of this year.

The outlook by Daniel Daggers of the super prime sales team at Knight Frank is:

‘Unless you have a buyer who needs to move for family or business reasons or alternatively a unique property, the gestation period prior to a transaction is longer.’

‘I sense a change coming. You can tell by the level of engagement we are now seeing from buyers. Prices have risen more strongly outside zone 1, which means there will inevitably come a time when the central areas start to look good value again.’

By Kevin Murphy: