Intellectual Property - Camden & Regent's Park, Summer 2015
Mon 15 Jun 2015
Certainty restored: Whats next for the London property market?
Now that the dust has settled on the outcome of the General Election, we believe home-owners in London can heave a sigh of relief, confident in the knowledge that the onerous policies of mansion tax and rent controls are off the agenda.
The unexpected Conservative majority does not mean it will be a universally smooth ride for the market. I fully expect the new Government to raise new taxes on expensive property, probably via increased council tax bandings. In reality, this may be difficult to implement so it will be interesting to see how this is proposed. Either way, my view is that property taxes will increase in the coming years. Whilst this cannot be seen as good news for the market, it will do little to dim the attraction of London as a world class place to both live and to do business, and the confidence engendered by a pro-business government will continue to draw in capital and talent from all corners of the globe. We should applaud this as London is, and will continue to be, a huge driver of the economy for UK PLC and we should interfere with it at our peril!
So, what does this mean for property prices? Central London, by definition does not have huge swathes of building land, therefore it seems obvious to me that prices in London will continue to rise. Central London has never been affordable for most people and were kidding ourselves if we think it ever will be. However, the rise in value in Central London has had the ripple effect of allowing developers and builders to look further afield and build high quality property in areas ever further out and I believe prices in adjacent suburbs will continue to increase at pace. Areas where the communications are good and there is a supply of good quality, attractive period properties, will appreciate the fastest and will also appeal to buy-to-let investors. Buyers will however, be prepared to pay top dollar for properties in outer-prime parts of London. Its a fact of geography that however much we try, supply in London will always be limited and with that in mind, prices will continue to rise.
Peter Rollings,Chief Executive
Local Sales Market Update
The Camden team has experienced some fantastic results since opening our doors last October. Both supply and demand have increased steadily, up 14% and 58% respectively since January, so it certainly is a sellers market. The supply-demand ratio stood at seven buyers for every property in the first quarter of the year and that now stands at an average 10 buyers in quarter two.
One thing weve come to appreciate is that much like the area is known for its eclectic mix of cuisine and the arts, the same is true for Camdens residents. Many purchasers come from backgrounds of music, media and the arts, yet on the opposite end of the spectrum we see professions such as lawyers, doctors, architects, and those in the financial sector seeking property in this wonderful
pocket of London. Buyers range from international investors to corporate professionals (both young and established), celebrities, couples, families sizing up and down, and everyone in between. The combination of these many types of residents makes the area interesting and varied, and fortunately, an ample diversity of property in Camden exists to suit them all.
One- and two-bedroom flats are incredibly popular and from what weve seen, this arena is the most fluid section ofthe market, with extremely high demand for balanced proportions and good living spaces for entertaining. We recently generated competitive bids within a week of marketing a two-bedroom, new-build apartment on Wilmot Place, set to exchange at the time of writing for 1,272,000 on an asking price of 1,250,000.
Many clients are young families wanting to stay in the area, but ultimately need to up-size to a larger house as the family grows. These upgraders are determined not to compromise on their requirements and often wait for just the right property to come onto the market. However, in the current market, those who wait, do risk losing out. We recently sold a period house in need of modernisation on St. Martins Almshouse, to a family moving from a flat. Within weeks of bringing the house onto the market we received multiple bids and achieved 55,000 more than the asking price of 1,350,000.
Interestingly, properties in need of improvement or expansion potential are extremely popular and very often, achieve a premium. They offer buyers the opportunity to really add personal flair and style to their home something that local architects and artists really love. And it is always a pleasure to visit when valuing such stunning properties after works have been completed.
Areas of note include Albert Street and Arlington Road; both highly desirable pockets just off Parkway, that provide a quiet residential atmosphere for families, yet with all the amenities still nearby.
It goes without saying that Primrose Hill remains popular for its leafy green environment, local independent shops, cafs and restaurants. Looking ahead, gentrification and development are certainly set to continue throughout 2015 and beyond, and prices will continue to rise steadily in line. The regeneration at Kings Cross station and the surrounding area has been a major contributor to this evolution, however Im pleased to say the change is complementary to the local surroundings, with low-rise developments and innovative designs. The impact has been positive and Camdens character and charm holds steadfast, which is great to see.
Local Lettings Market Update
Since opening last October we werent exactly sure of what to expect, and I was interested to see if the patterns experienced in our neighbouring offices would be replicated here. Similar to our Marylebone and Little Venice offices, it has proved incredibly busy across the board and the traditionally active Spring lettings market is certainly in full swing.
Camden, like many other parts of prime central London, has consistently seen demand outweighing supply, with an average nine active tenants competing for every available property in the three months to May 2015.
From international students, to celebrities and high-calibre business people, theres a great variety of tenants in the area and an equally diverse measure of properties to match; ranging from lovely studio apartments right up to large four-bedroom houses in highly desirable areas.
Regents Park and Primrose Hill are popular with families looking for three- and four-bedroom houses in this leafier, quieter part of town, with families often renting locally before making the move to purchase. With the opening of a new French school in Kentish Town recently, weve seen a flurry of French families relocating here to be close to the school, looking to rent larger family homes before committing to a purchase.
Conversely, Camden Town and Chalk Farm are attractive to those seeking a more lively existence such as younger professionals, sharers and students. One- and two-bedroom bedroom properties remain incredibly popular and were regularly achieving in excess of 500 per week for good sized and well presented properties, often within a week of them coming onto the market. Weve certainly seen tenants happy to commit to longer-term tenancies of two or three years (mainly those over 25), so that their rental outgoings are fixed in a rising market. They know Camden well and are confident theyll stay in the area.
The regeneration at Kings Cross station and the surrounding area will continue to impact the desirability of Camden, with major fashion houses and technology companies such as Facebook, Google, and Amazon all now operating nearby. For investors, rental yields are still very favourable compared to other parts of London such as Notting Hill.
Our Corporate & Relocation Services Department now works with almost 800 organisations across varying sectors including finance, entertainment, and technology; a number of relocation agents also consider us their first port of call for corporate clients. Weve seen an astounding 44% increase in corporate tenants compared to the same period last year, and expect this will only continue, as London remains ever the global economic powerhouse for business. In our experience, these corporate tenants tend to be the most favourable as they invariably have excellent budgets and spend very little time in the property, so minimise wear and tear.
One things for sure: Camdens popularity is unrivalled. It offers excellent transport links, fantastic entertainment and shopping facilities, and in particular retains the classic charm of an eclectic London village. Its no wonder the area continues to attract investors and tenants from all corners of the globe.
Whilst Prime Central properties priced over 5 million have faced headwinds over the last twelve months, recent activity has been promising. In a recent four-week period, we exchanged close to 40 million worth of property in Notting Hill alone, with an average value in excess of 8 million; this points to a positive and welcome improvement in market conditions at the higher end of the market. Strong capital appreciation and a good number of transactions in outer London led to a lot of inaccurate commentary in 2014.
In reality though we saw measured capital appreciation for properties valued over 5 million in our central region, and while good premiums were achieved, careful management and profiling remains crucial. With credit markets still tight, constrictive City legislation and greater transaction costs, buyer confidence still needs to be won. This said, with the threat of a Mansion Tax lifted and Londons appeal as a global centre more certain, I believe the 12-month outlook will be positive and look forward to a good activity-inducing period of stability. While international reach is important in the sale of Prime London property, I find its equally important not to undermine the value through haphazard advertising, marketing glare and unwelcome intrusion. Often, our best results are achieved through a highly targeted approach, where discretion is preserved and potential buyers are identified through our existing network; the largest network of offices in Prime Central London. Our Prime Sales Department offers a bespoke service, where our experience and intimate understanding of the Prime London Market enables us to navigate through the difficulties that might otherwise derail transactions.
To find out more about our Prime Sales service, please feel free to contact Keith Gorny, Director of Prime Sales.
Contact Keith on:
T 020 7368 4197
The London residential development market is one of the most dynamic markets in the world. In terms of development activity, the last time the Capital witnessed such a boom in housing delivery was in the 1930s, and much of that was on greenfield land. Whilst much criticism is rightly levelled at an undeniably bureaucratic and overburdened planning system, we should not judge it too harshly.
The statistics below make for compelling reading:
1.Construction starts in Q1 2015 were double what they were in Q1 2014 and 177% up on the quarterly average for the last five years (source: Molior)
2.Total units under construction are double what they were in the previous peak in 2007
3.There are eight regeneration zones being delivered simultaneously across the capital comprising a total of 84,000 units this is an unprecedented level of development! The regeneration zones are:Vauxhall/Nine Elms, Silvertown, Brent Cross, Old Oak Common, Earls Court, Kings Cross, Greenwich Peninsula & Stratford/Olympic Park
To put this into context, since 2008 Londons population has increased by 600,000 to a level of 8.6m. By 2020 it is forecast to be 9m and by 2031 it is predicted to breach the 10m barrier. From a supply perspective, it is well know that London faces a chronic under-supply of housing. What is perhaps less well known is what it will take to remedy this scenario. According to research undertaken for the Mayors Office, London needs to see twice the current increase in house building levels to deliver 42,000 new homes a year until 2035. That is the equivalent of 50% of the combined total units being provided across Londons eight regeneration zones in a single year for 20 years!
Outside of a dramatic overhaul of our planning system and a streamlining of the manner in which development land (and specifically land held in the public sector) is brought forward for development, it is hard to see the demand / supply imbalance being corrected any time soon. All of which means that despite the inevitable ups and downs of a cyclical market, the long term projection for house prices and rents remains upward and it is hard to argue against the consensus forecast of 25% growth in London house prices over the next five years. What is certain however, is that there has never been a more dynamic or exciting time to invest in the London residential development market, given the truly world class supply of cutting edge residential developments on offer.
T 020 7368 4831