On the Market - Notting Hill, Holland Park & North Kensington, Spring 2014
Tue 11 Feb 2014
Liza-Jane Kelly looks at local property prices and the major factors currently influencing property sales
The 2013 London property market was characterised by a severely limited supply of property for sale and a growing number of buyers coming into the market. This of course, created the perfect conditions in which to sell your property, very often for a great premium, but conversely, not the best conditions for buyers, who were in constant competition for the right property.
At the time of writing, we have a total of 20 buyers registered for every available property with our Notting Hill, Holland Park and North Kensington offices this ratio is almost twice as much as the same time last year. With such an imbalance of supply and demand, its no surprise that in recent months we have seen some of the highest price rises ever recorded. I often hear people comment that these increases must be good for estate agents. Well, there is of course some truth in this however, in reality, we dont want dramatic price rises any more than the masses of hopeful buyers trying to get a foot on the ladder. Our preference is always for a stable property market, with a healthy turnover of property to satisfy the buyer-demand.
Whilst sellers choosing to sell their property now are benefiting from the high number of buyers and the possibility of a jackpot price, we expect this imbalance of supply to level out as more property comes onto the market in the traditionally busier Spring. At which time, as estate agents, we will be pleased to welcome a healthier, less fraught supply/demand ratio. Indeed, in previous years, we have recorded an increase of up to 20% more property coming onto the market between January and March and we dont expect this year to be any different.
Life events such as births, deaths, marriages and divorce remain a major factor for properties coming onto the market. But interestingly, more recently, we have noticed that property investors have been selling their rental investments and re-investing in less prime areas of London, where the short-term rental yields are more favourable. Once on the market, these properties are being snapped up by investors again - but instead of the traditional professional (or portfolio as they are also known) investor, it is more likely to be bought by a family (or pension fund) investor who is less concerned about the short term yields and more focused on the long term capital growth. They are very often buying with their childrens future in mind, at the same time as investing into what is, a bullet proof, tax efficient investment.
We are receiving an increasing number of enquiries from non-domiciled property owners, who have concerns about the increases in capital gains tax proposed for 2015. The government is yet to provide clarity on how or from what date the capital growth will be calculated and therefore this is causing uncertainty in the local market. And when you consider that 50% of our property was sold to international buyers and foreign nationals in the past few years - the implications of the proposed changes in tax could affect a substantial number of people living in the area.
Despite caution in some sectors of the market, we have seen the return of developers, particularly in Notting Hill, which is a sure sign that confidence has well and truly returned to the market and healthy margins are achievable.
All three offices in the area - Notting Hill, Holland Park and North Kensington - continue to benefit from a shared database of buyers, who will invariably consider neighbouring areas if the right property comes up, especially while there is such a limited number of properties on the market. Indeed, 35% of the property we sell in this area, will be to buyers registered with one of our nearby offices - and that also includes Kensington, Little Venice, Marylebone, Chelsea, and sometimes even as far as Fulham!
Contact Liza-Jane on:
T 020 8846 3492
Charles Holland provides an overview of the central London residential development market in 2013 and looks at whats next for this rapidly evolving market
2013 was quite a year for the residential development market. What set it apart from other years was not only the very substantial price growth witnessed across the capital, but also how Government intervention has taken effect. The private rented sector is no longer an asset class dominated by small private landlords, but one that institutional investors are now more comfortable with. And finally, the arrival of the Chinese into the development arena as developers, and not just investors.
The year started with the hugely successful sale of the first phase at Battersea Power Station. Despite not completing until 2015, the first phase of circa 800 apartments sold out within just a few weeks. Whilst international purchasers accounted for a very significant proportion of sales, so too did UK domiciled purchasers. The launch of the site, which had lain dormant since the last puff of smoke was emitted from those iconic chimneys back in 1983, wasconsidered a resounding success for the Malaysian consortium of developers. The development finally looks set to become a reality and has provided an implicit vote of confidence for the London property market.
Despite this, for much of the year, the main talking point was PRS the Private Rented Sector, which accounts for 3.6m households in the UK, according to the Montague Report. Interestingly, a staggering 99% of those households are held by investors with fewer that 10 rental properties. The report made five key recommendations, a number of which were put into practice in 2013, paving the way for institutional led investment in the sector. These include the creation of a Government PRS taskforce, the provision of government backed financial initiatives and the release of public sector land for development. The latter includes 360 London, an iconic 44-storey development by Essential Living, providing 470 new homes in Elephant & Castle, which Marsh & Parsons RDI is advising on. With pension funds such as M&G, Aviva and Legal & General all investing heavily in the sector in 2013, institutional investment in the PRS has finally became reality.
Later on in the year, the Help to Buy funding initiative stole the limelight. The first phase of the scheme, launched in April, provided Government backed equity loans on new build properties worth up to 600,000. The second phase, which included second hand homes, followed in October. The impact of the first phase was significant, with Barratt reporting 29% of its 2013 sales to purchasers using the scheme.
Finally, 2013 saw the arrival of Chinese developers into the London development market. Major deals were announced at Royal Albert Dock where ABP committed to a 1bn overhaul of this 35 acre site and Dalian Wanda completed the purchase of One Nine Elms, a 700m residential led development in the heart of Nine Elms.
2014 is picking up where 2013 left off. Major development deals involving Chinese companies have already been announced in Wandsworth at the Ram Brewery and at Hertsmere House in Canary Wharf. There is now a growing sense of optimism in the development market: four major residential led regeneration projects are underway, at Earls Court, Kings Cross, Battersea Power Station and the Queen Elizabeth Olympic Park, which combined, will provide circa 20,000 new homes.
Furthermore, Londons improving infrastructure (Crossrail, Thames Tunnel and the Northern Line extension etc.), is reinforcing London as the pre-eminent global Capital and further growth in 2014 looks readily achievable.
Contact Charles on:
T 020 7368 4831
Anna Ambrose looks at the current demand from tenants and what may happen to rental prices in the current year
The start of 2014 came with an increased number of tenants looking to secure property, with an equally good number of available rental properties, following a shortage at the end of 2013. Between our Notting Hill, Holland Park and North Kensington offices, we registered over 200 new tenants in the first two days of 2014 - a good sign for the growing number of landlords in this area of London.
Whilst both tenants and landlords are making the most of this traditional peak, in some sectors of the market, principally the family house market, there is a shortage of good quality properties to satisfy the demand. Searches for the latter are dominated by international relocations into London, via our Corporate & Relocation Services team.
Enquiries coming from corporations tend to have significant budgets for their chosen areas - predominantly Notting Hill and Holland Park. Interestingly, in the last quarter of 2013 we had a 16% increase in the number of new corporate enquiries compared to the same period in 2012 - as well as an 11% increase in the number of searches that had a budget of more than 1,500 per week. As a result, we have recently secured multiple tenancies, with many large corporations including StatOil, Ratheon and CIMB Bank, on behalf of international relocatees.
Good quality one-bedroom properties continue to be in the highest demand for young professionals, with tenants favouring spacious reception areas, open plan kitchen/dining areas and outside space, over an additional bedroom. Properties that fill this criteria are receiving multiple, competing bids and tenants are happy to pay a premium for the best quality apartments, in the best locations. Two- and three-bedroom flats continue to be popular with professional sharers, as long as they have equally good proportioned bedrooms.
As is often the case at the beginning of the year, we have seen a flurry of the so-called organised tenants, who serve their notice now, with a view to finding their new home in March. As a result, we are encouraging our landlords with existing tenancies in place, to think ahead and market their property in plenty of time. Our Renewals Department has reported an increase in the number of landlords looking to renew their contract at a higher rent but many are requesting more flexibility in the term of the renewal, in case they wish to sell their property in the near future.
The continued strength of the sales market in W11 and W10 has resulted in some very large price increases and so, the temptation to landlords to release their capital in a market where rental yields have softened, is starting to come to fruition. With this in mind, we may see rental price increases later in the year in line with a decline of available rental property in the area.
Contact Anna on:
T 020 7313 6911