In the month of March, all-around property prices in central London increased by 0.6% m-o-m and increased 3.6% on a half-yearly basis, as per the research of London Central Portfolio (LCP) which is a London-based real estate investment and buying agency.
A swell in transaction volume in the coming months will increase prices from their lows as buyers get over the uncertainty that has plagued the market from 2022 onwards Adds Naomi Heaton, founder and chair of LCP.
Since 2015, the main market in central London market has been facing problems due to increasing property taxes as well as Brexit uncertain, says Heaton. She notes how the general elections of 2019 that brought into a new Conservative government was accompanied by a rise within the main London property markets. “We were aware of this due to the fact that it was shut down for a long period and there was plenty of untapped demand. However, the recovery was disrupted by the Covid-19 virus,” she adds.
Heaton states the market was at a complete stoppage within market activity in the London marketplace during period of the pandemic since price growth and transaction volume slowed. The investment market for real estate was particularly hard hit she says.
Investors were again scared when the conflict in Ukraine started in February 2022. But when she spoke with EdgeProp Singaporein June this year, she observed that the prices and transactions were gradually increasing.
Even the current higher interest rate environment is not likely to diminish the rising demand for investment she believes, since most of the buyers do not rely on loans to fund their purchases.
Foreign buyers are unhindered by the high rates of interest
In the months prior to September the local UK buyers enjoyed low rates of interest and stamp duty holidays when buying new homes. “But rising interest rates [currentlywill have the greatest effect on local buyers. The majority of people will reach the final year the term of fixed loans within between two and five years, and it will result in a major impact on buyers in the domestic market,” says Liam Monaghan the managing director of LCP.
While overseas buyers are at ease about buying and are now able to do so at central London. There’s been an enormous number of buyers interested in Asia Pacific-based investors looking to relaunch their investment plans in central London as per Heaton.
Monaghan and Heaton visited Singapore in the last month in the course of a quick tour around the region to meet clients from the city-state, as well as Kuala Lumpur and Hong Kong. “There is a huge demand for propertiesand a large number of the people we’ve been able to reconnect with want to invest again,” she says.
In central London flat prices, the city have recorded the highest price increase that was 3.8% on a half-yearly basis in June 2023. This also translates to an increase of 2.7% gain over a three-month time frame. For comparison, homes in central London increased by 2.3% over a six-month period, and grew by 1.8% over a three-month period, as per the research conducted by LCP.
“The principal market in the central London market is certainly showing signs of being able to weather the current storm, when compared to the rest of the market, despite rising mortgage rates and a high rate of inflation” Monaghan says. Monaghan. “This is due in part to buyers buying in cash or without funding and therefore being immune to increases in interest rates.”
One of the top priorities for most of her clients was to purchase a home to their kids. “These customers are seeking to purchase property in London which their children could reside in during their time at university. We have also observed that parents initiate this process while their children are small,” says Heaton.
So, education continues be the primary motivation for those who purchase central London properties. A stable investment is second on the list according to her.
She also has noticed a shift in Hong Kong-based buyers who thought of the central London properties as a way to expand their investment portfolios globally. In recent years the majority of them are purchasing to use for personal reasons She says that the uncertain political climate that has been threatening the Chinese city in recent times is causing Hong Kongers to think about moving to another city.
The price increase is accompanied by an increase in transactions
A majority of the buyers LCP assists tend to have budgets that range between GBP1 million ($1.71 million) to GBP2 million, Heaton says. “Most purchases in central London are for smaller units. This is because there aren’t too many houses or large homes currently available.”
According to Heaton the activity of investors is just beginning to increase. “My personal opinion is that the price in London is the lowest it is going to get under present market conditions and is at the same rate for the last 3 years now,” Heaton says.
“But when the amount of the investment traffic is increased then you’ll begin to see multiple bids for available properties. That’s when we’ll see prices rise,” she adds.
Monaghan believes that the prime Central London prices are currently around 5.9% below their 2015 historical peak Flats are being sold for an average 6.7% under the 2015 peak, and houses selling at around 0.5% below the peak.
“With rent values increasing significantly and often equal to the monthly mortgage payment or more parents are realizing the value of helping their kids get on the property ladder today,” he says.
Since Heaton founded LCP as a buying agent in the year 1990, the firm has expanded its offerings in its central London market. The company now has an in-house team of architects and interior designers who transform investment assets purchased by its clients to use for their own use or lease out and anchored by its own leasing as well as property administration departments.
The scope of services increased organically throughout the years, as client profiles were more sophisticated, according to Heaton. “When we began, most of our clients from overseas were at exhibitions to promote new constructions,” she recalls.
As investors become skilled and knowledgeable and new generations enter in the real estate market, they are aware that the most sought-after properties are historic properties located in central London she adds. “I believe there’s an increased level of sophistication in the market, realizing that being in the middle of London is the place with the best value for long-term.”
Other House Other House
The latest direction of the company under the direction of Heaton is based on its expertise in the areas of interior design leasing, design and property management to launch the first line of luxurious and serviced pied-aterres located in the heart of London. The new concept is dubbed The Other House.
“The The idea behind The Other House comes from our observations of developments in the rental market for private homes in London. We manage a vast rent portfolio that includes properties in central London for the clients we represent,” says Heaton.
She says that, over time she has noticed that tenants are choosing for smaller homes and are willing to give up space in exchange for a more central area. In the same way tenants are seeking out homes that are well-designed and rented-out properties are likely to provide an ideal lifestyle as the market for lettings gets more sophisticated.
“I realized that what the tenants would like is a resort-style lifestyle. That led me to consider the concept of a “long-stay” hotel to satisfy their need for an ideal location and hotel-like services as well as club facilities. apartments-style living.” Heaton says. Heaton.
The Other House opened its first property in Harrington Gardens, South Kensington in the month of July 2022. The property was designed by the London-based Bergman Design, features 11 Victorian townhouses with 237 apartments and private meeting rooms. They also have dining rooms, as well as space for events. Apartments range from studios up to three-bedders that range from 247 sq ft to 656 square feet. There is also the option for connecting four flats to create a an area of around 1,238 sq feet.
A club that is exclusive to residents includes 2 bars and a cinema room, as well as a variety of health and wellness areas including a fitness pool as well as a gym and an area for meditation. F&B items are supported by the 24-hour street café The Other Kitchen and a special cocktail bar known as The Owl and Monkey.
“Working with buildings of the past has many challenges, and there were some surprising discoveries as well as some pleasant surprise, often not revealed until the strip-out process is in the initial phases,” says Heaton. “Restoring historical buildings is very satisfying and is what makes each of our Residents’ Clubs individual, distinct and in tune with the past.”
Heaton states that LCP is planning to launch a second collection of residences in the form of The Other House situated at Covent Garden in November 2024 and a possible property located in Belgravia. Heaton is also looking into possibilities to introduce the brand to key cities that are considered gateways to the world in the near future.
In the meantime, she is hopeful about the prime market in central London market. “Overall the local (prime central Londonmarket is performing very well compared the markets of England and Wales however, it’s in a state of flux. It hasn’t changed since Covid-19. I’m confident it will stay the same, however there could be a decrease in transactions, especially in the lower part of the market where localbuyers are being affected by rising mortgage rates,” says Heaton.