Wall Street Journal: London Neighbourhoods that offer more Punch for the Pound
Fri 01 Feb 2013
London Neighbourhoods that offer more punch for the pound - Buyers priced out of prime areas can find attractive alternaitves a mile or two away with no shortage of character or star power
Foreigners, who already dominate London's high-end housing market, will soon have an added temptation to settle down in the city: a trend-defying tax cut on high-income earners that takes effect this spring.
The drop in the top marginal tax rate, to 45% from 50%, could shave about $170,000 off the tax bill for someone earning more than $1.6 million a year, opposition politicians say.
Yet even those with seven-figure buying budgets are finding that their millions don't go very far in London. British pop star Robbie Williams, who is currently house hunting, says he's shocked by the "astronomical" prices for a family home. "I don't know how anybody can afford to live in London," Mr. Williams said at a news conference in November.
Mr. Williams is, after all, searching in the central London borough of Kensington, home to the likes of steel tycoon Lakshmi Mittal and heiress Tamara Ecclestone. According to the real-estate agency Savills, average prices in prime central London have risen almost 22% since 2007, to $8.4 million. (Last year, overseas buyers snapped up 65% of the homes priced between GBP 5 million and GBP 10 million, or $7.9 million to $15.8 million, Savills reports.)
Fortunately, among London's 120 postal zones are some attractive options that offer more for the money. Below, a look at three alternatives to well-known neighborhoods.
NOTTING HILL VS. QUEEN'S PARK
Notting Hill, home to fashion designer Stella McCartney and the Portobello Road street market, is undoubtedly one of the most fashionable London addresses, with its fabulous shopping, robust night life and Bohemian vibe.
Just 1 1/2 miles to its north is lesser-known Queen's Park, which is quietly becoming London's answer to Beverly Hills: Actors Sienna Miller, Jason Isaacs and Thandie Newton all have homes here, as do Alexandra Shulman, the editor of British Vogue, and the writer Zadie Smith.
A decade ago, Queen's Park was a fairly grubby suburb, but as prices have risen in prime London, the area has benefited from an "overspill" effect, says Spencer Jacobs, manager of the Queen's Park Partnership, a real-estate agency.
Londoners who long to live in Notting Hill but can't afford it have started looking northward, while some Notting Hill residents are swapping their cramped apartments for family homes in Queen's Park.
The invasion of celebrities, bankers and middle-class families has brought with it an influx of organic delis, gastropubs and designer boutiques.
Queen's Park is also popular with Western European buyers; Mr. Jacobs says around half his clients are from overseas, although the area still flies below the radar of American and Asian buyers.
Its central location -- less than a half-hour by train to the West End, and less than 2 miles from the American School in London -- plus its roomy Victorian and Edwardian housing stock are key attractions. The eponymous park at the hub of the neighborhood features all-weather tennis courts, a pitch-and-putt course and a picturesque bandstand.
Today, properties on Kingswood Avenue, which faces the park, sell for more than $5.5 million. But perhaps the most distinctive local architecture can be found in the cute Gothic revival cottages in the Queens Park Estate development. A two-bedroom cottage there would start at about $800,000.
CANARY WHARF VS. LIMEHOUSE
Canary Wharf -- London's gleaming business district -- is a magnet for house-hunting bankers arriving in the city. And at first glance, Canary Wharf's average prices appear very reasonable. But those figures are skewed by the towers of cheap "starter" flats aimed at young, equity-poor workers.
In fact, living near the glass skyscrapers of firms like Credit Suisse and J.P. Morgan can be very costly. Prices in Canary Wharf's prime blocks, like Pan Peninsula, come in between $950 and $1,400 per square foot. A rental penthouse at the neighborhood's Millharbour block is currently on offer at $5,500 -- per week.
And then there's the question of neighborhood character. By London standards, Canary Wharf is brand-new -- and some would say soulless. Once a dismal dockside area to the east of London, it was reborn in the 1990s as a modern business district.
Just over a mile away lies Limehouse, where the narrow cobblestone streets exude character and history. This is an area that inspired writers from Charles Dickens to Arthur Conan Doyle, and it will appeal to anyone keen to experience real London life with a short commute.
"Limehouse is much more of a residential area than Canary Wharf," said Andrew Groocock, head of sales at real-estate agency Knight Frank's Canary Wharf office. "In Canary Wharf, you live in a high-rise development and you don't have a local pub or know your neighbors. In Limehouse there is a community."
Limehouse is also increasingly trendy. Chef Gordon Ramsay owns a gastropub on Narrow Street, while the actor Ian McKellen, a longtime local resident, is the co-owner of the Grapes, a historic pub where Dickens once drank. Narrow Street is the best address in the area, although its Georgian townhouses rarely come up for sale. A modern two-bedroom apartment with around 1,000 square feet of living space costs about $1.2 million, says Mr. Groocock.
Limehouse is on the edge of the River Thames, and a warehouse apartment with a view of the water in the upmarket Commercial Wharf, with around 2,000 square feet, would run around $2.4 million.
The area has excellent transport links via the Docklands Light Railway direct to Canary Wharf and the City, London's main financial district.
Perhaps its biggest drawback is the lack of top-performing schools nearby; not surprisingly, Mr. Groocock says, most residents tend to be young singles and couples.
SOUTH KENSINGTON VS. PIMLICO
The presence of the Lycee Francais Charles de Gaulle school has made "South Ken" the heartland of Britain's French community. And it is undeniably a desirable area, close to great London museums like the Victoria and Albert and brimming with patisseries and newsstands selling Le Figaro alongside the Times.
But 2 miles to the east lies Pimlico, with just as much charm at around half the price.
Pimlico's location within walking distance of Parliament has long made it a popular choice for politicians. The presence of supermodel Elle Macpherson adds a touch of glamour as well.
And while South Kensington residents can walk to Hyde Park, denizens of Pimlico can stroll to the equally lovely
St. James's Park.
Upper Tachbrook Street and Elizabeth Street both have great independent shops, and the department stores of Knightsbridge are a short walk away.
The Tate Britain art gallery is also close, yet its low profile means the neighborhood remains relatively quiet and tourist-free. Nearby Victoria Station offers quick links to the West End and direct trains to Gatwick Airport.
A key attraction for American buyers is that Pimlico is on the north bank of the River Thames facing Nine Elms, where the new U.S. Embassy is being built.
It also has some fine architecture: Regency townhouses built around grand garden squares.
"South Kensington has got a 'name,' but I think if people came to Pimlico and saw its garden squares and architecture, they would be wowed by it," says Alexander Leschallas, an associate at the Hamptons International real-estate agency.
While Pimlico is a good value compared with proper central London, it's not cheap. Mr. Leschallas says he has seen prices rise nearly 50% in the past three years. And most houses lack garages or parking spaces, so car owners must take their chances on the crowded streets.
Mr. Leschallas recommends Warwick and Eccleston squares as the finest addresses. A two-bedroom apartment of 1,500 square feet on an upper floor (with views across central London) would cost about $3.2 million; smaller ones start at $1.2 million. For families, a four-bedroom period townhouse on Cambridge Street would cost $3.2 million to $4.8 million.
Buyers, says Mr. Leschallas, are around 50% British. Italian buyers love the area, while American, Asian, Spanish and even French buyers are arriving in increasing numbers. "The area is improving all the time," he says.
On the Market
St. George's Drive, Pimlico
Asking price: $8.8 million
This five-bedroom corner house comes with two self-contained apartments. The main house has four bathrooms, two reception rooms and a media room, plus a roof terrace; it is crammed with original features like fireplaces and cornicing. The two apartments, which could be incorporated into the main house, each have one en suite bedroom. The total floor space measures 4,828 square feet.
Agent: John D Wood & Co.
Drake House, Limehouse
Rent: $1,408 per week
A triplex apartment in the picturesque Limehouse Basin, with a huge reception room leading out to a balcony with great views over East London. The roughly 1,600-square-foot apartment has three bedrooms, two baths and a private roof terrace.
Agent: Chesterton Humberts
89 Harvist Rd., Queen's Park
Asking price: $4.32 million
This four-story, five bedroom Victorian with three bathrooms and two reception rooms was recently refurbished, and includes an extended kitchen/dining room. The property measures 2,874 square feet; outdoor space includes a garden and a terrace.
Agent: Marsh & Parsons