On the Market - Marylebone & Mayfair, Autumn 2013
Fri 20 Sep 2013
David Ruddock talks about the strong demand in Marylebone & Mayfair and suggests where the canny investor should look at buying
Since the launch of our office in June, demand for property in the area has been insatiable, even throughout July and August, which is often a quieter time of year. We now have 15 buyers for every available property for sale through our Baker Street office alone. You only need to take a cursory glance down any of the areas popular streets to see why this area is so sought after we are full to the brim, and not with tourists, but with our international residents. They are here for both business and pleasure and a substantial percentage of them are looking to expand their residential holdings.
Both Marylebone and Mayfair continue to attract a large number of portfolio investors, as well as UK and international professionals buying principal residences; our international desk has proved to be extremely useful here! Demand is strong throughout the whole market, though apartments between 1.5m and 2.5m for international students attending the London Business School, Regents College and UCL, seem to be particularly popular. Just last week, we registered a Spanish buyer looking to buy a property for up to 2m in cash, for his son who is studying at Regents College.
Naturally, the strong demand has fuelled continued capital appreciation. Our research department track this at just under 10% year on year and any predicted slow-down is hard to believe. Mayfair is averaging between 2,500 and 4,000 per sqft with Marylebone between 1,200 and 1,800 per sqft and there is a 10-15% premium on new build flats, with Middle Eastern and Asian buyers being the dominant driver. One developer of a prime central Marylebone site due for completion in 2015, is predicting sales at 4,000 per sqft and with ground breaking precedents set by Candy & Candys One Hyde Park, why shouldnt he? My top tip for the astute investor is to consider north Marylebone above the Marylebone Road. Properties are achieving between 800 and 1,200 per sqft, which is substantially below those just south of the road. Its true, the postcode snobs will say it is NW1 not W1, but this differential seems artificially high and the gap must surely close soon?!
As we move through the autumn market, I expect continued high demand for all types of property. There is a positive feel in the air the market is now moving at the bottom with high investor demand being added to by those aided by government initiatives including the Help to Buy scheme, which despite not directly affecting this area, is freeing up valuable mid-ladder buyers. This will no doubt be accelerated in 2014, with the introduction of the Help to Buy Mortgage Guarantees for home movers (not just first time buyers).For this very reason, now is a great time to sell your property the inevitable increase in stock levels next Spring will likely reduce the premium currently being paid.
Chris Coombes looks at the shift in requirements from tenants and the increased demand from buy-to-let investors and corporate lets
The busy Autumn lettings market in Marylebone and Mayfair has arrived, and being new to the Marylebone area, we werent exactly sure what to expect. Ive worked in the central London property market for many years and was interested to see if the patterns experienced in our neighbouring offices would be replicated here. Similarly to Notting Hill, Little Venice, Chelsea and Pimlico, weve been incredibly busy across all areas of the market. The types of properties available range from lovely studio apartments right up to large four-bedroom lateral apartments in highly desirable buildings, whilst the diverse mix of tenants includes international students and high calibre business people.
Marylebone, like many other parts of central London, has seen a trend of supply outweighing demand across the market, but particularly in larger apartments or mews houses typically in the 1,000 to 1,700 per week price bracket. However, since opening, we have received a high level of applicant registrations partly due to our office location, but also because of our international web presence and access to high-end corporate tenants via our Corporate & Relocation Services department. As a result, were clearing some of the back-log that had remained on the market for some time. In contrast, one-bedroom properties remain incredibly popular and were regularly achieving in excess of 500 per week for good sized and well presented properties, usually within 24 hours of them coming onto the market.
In recent months, we have noticed a change in the requirements tenants have. They are placing less emphasis on the size or location of their next home than previously, and are now seemingly far more focused on the condition of the property. Corporate tenants, whether international or domestic, dominate this section of the rental market where their desire to have the best quality lifestyle is dictating their renting decisions. This shift in priority has made it impossible to place a valuation on a property without seeing it first. Such is the importance of quality, over size and location, we wont even risk providing a speculative value to landlords. Overall, most landlords are in tune with this trend, and to stay ahead of the competition, many of our landlords, even the most experienced, have raised their game.
Marylebone is generally more affordable than neighbouring Mayfair and offers comparatively good value to investors. Whereas some areas of central London have reported a slow-down in overseas investment, Marylebone is still very much a hot spot for international buy-to-let investors. Many of these buyers are looking ahead and see now as a good time to purchase a London property, ready for their children to use in the future when they study in the capital. In the meantime, they are enjoying a healthy rental yield and excellent capital growth. Despite being new to the market, these landlords are savvy and ensure their properties are excellently presented, furnished to a great standard and, perhaps most importantly, are priced accurately to rent quickly and not sit empty on the market. In the short term, this has increased supply, but as the market moves further into autumn/winter, we expect to see supply and demand even out.
Our Corporate & Relocation Services Department works with a number of relocation agents and businesses of varying sizes. In the last year, we have noticed a 42% increase in the number of high-end searches, which we consider to be 1,500 per week and more. These budgets have recently been as high as 8,000 per week! With companies becoming increasingly global, the need for experience across all markets is seen as a key attribute for future leaders, so there is now a focus on relocating their senior staff. This trend is two-fold, with an increase in Corporate tenants relocating to London at the same time as local home-owners moving abroad for several years and renting their home until they return. Just a few years ago, these same companies were preferring to relocate more junior employees to save on ex-pat packages. In our experience, Corporate tenants tend to be the most favourable. They invariably have excellent budgets, they spend very little time in the property, so minimising wear and tear and most notably, they almost always have a regular cleaner to keep the property in great condition.
One things for sure: Marylebone and Mayfairs popularity is unrivalled. They offer excellent transport links, some of the best restaurants and shopping facilities in the Capital, are surrounded by some of the worlds most prestigious educational institutions and Marylebone in particular retains the classic charm of a London village. Its no wonder the area continues to attract investors and tenants from all corners of the globe.