On the Market - Kensington, South Kensington, Chelsea & Earls Court, Spring 2014
Tue 11 Feb 2014
Craig Tonkin reflects on the continuing high demand for property, record breaking prices and an increasing number of European first-time buyers
If I was asked to summarise the 2013 London property market, in just one sentence, I would say:An all-time low of available property led to fierce competition amongst the ever-growing number of buyers resulting in price rises, in all areas of Prime Central London, for all property types.
I often hear people comment that price rises 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 for a stable property market, with a healthy turnover of property to satisfy the buyer-demand. At the time of writing, we have a total of 19 buyers for every property registered with our Kensington, Chelsea, South Kensington and Earls Court offices - a ratio 55% higher than three years previously. (And with this many buyers chasing the same properties, prices will inevitably rise in 2014).
However, whilst sellers choosing to sell their propertynoware benefiting from the high number of buyers, we expect this 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 demand ratio.
In addition to lack of stock, another reason for the sharp rises in property values can be attributed to the new-build developments in the area, such as De Vere Gardens and Holland Green in Kensington, where record-breaking prices of up to 4,000 a square foot are being achieved - and re-defining the norm for the Royal Borough.
Most buyers registering with our offices are end-users. The professional investor has largely migrated from Prime Central London to outer parts of the capital, where they are benefiting from greater short-term gains, of a higher rental income. However, were registering many pension fund investors, who appreciate the longer-term capital gains that can be enjoyed in Prime Central London.
The Bank of Mum & Dad is still out in full force, and we have registered buyers eager to spend their parents money, who know that London property is a bullet proof, tax efficient investment. Most have between750k and 2m to spend however, we have just registered a girl in her early twenties with a budget of4.5m, in cash!
Recently, we have seen a marked increase in the number of first-time buyers registering with us - and some have substantial budgets for their first home. Many of these buyers are Europeans, who have been renting locally for several years and now realise the investment opportunities on their door step. This is a cultural shift for European buyers, who historically,havepreferred to rent and have now realised that London is a place they want to put down roots. Generally, there are still a good number of international enquiries and notably, weve seen a rise in Indian buyers looking to secure a London property. Were also starting to see the emergence of city professionals registering their interest in time for their anticipated bonuses due from the end of February.
Life events such as births, deaths marriages (and divorce) remain the driving force for properties coming back onto the market, with those trading up invariably moving outwards, to less prime areas of London. In previous years, we have recorded an increase ofup to 20% moreproperty coming onto the market between January and March - and hope that this year wont be any different.
Contact Craig on:
T 020 7368 4192
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
Verity Barrett looks at the current demand from tenants, including the corporate sector, and the best time to rent your property
Our Kensington, Chelsea, Earls Court and South Kensington offices, along with our further three offices in the Royal Borough, are all reporting a great start to the 2014 lettings market. Despite a slow down in the number of properties coming onto the market at the end of 2013, we are now seeing a good number of available rental properties to satisfy the increasingdemand from tenants, hoping to secure a new home.
The beginning of the year always brings an increase of corporate tenants, who are relocating to the capital with their employer. We are taking enquiries from corporations who are relocating employees across all parts of their business - ranging from corporate graduates right through to high-end directors, with significant budgets, and specifically looking in Chelsea.Interestingly, in the last quarter of 2013 we saw 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,Unilever andBritish American Tobacco on behalf of international relocatees.
Across all areas in the borough, studio apartments and one-bedroom properties are currently in high demand, particularly if they have a great finish and are located close to tube stations. Some tenants are giving notice on their existing tenancy once they find a property that ticks these boxes, and if the compromise is too great, they are staying put.Earls Court has bloomed in popularity over the past few months and in some cases, the one-bedroom apartments in Earls Court are achieving a better return for landlords, than the traditionally more central areas of Kensington & Chelsea.
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. And if they do sell, the supply of rental property could reduce, which in turn, will inflate asking prices.
The rental market hasnt benefited from the same price growth as the sales market in the last year, however this year has started strongly and our experience of previous years points to the market improving even further as we enter the busier Spring market. My advice to landlords is this: if you let your property now, youll secure a long-term contract, at a peak rental price.
Contact Verity Barrett on:
T 020 7368 4455