Residential Development Sales
The war in Ukraine, rising interest rates and double-digit inflation make it unusually difficult to forecast what may lie ahead. Buyers of prime property may be less affected day-to-day than the rest of the population by the severe cost of living squeeze. But they read the news, and recognise the impact of this crisis on the UK economy.
Demand for homes in new developments is evidence of a desire to invest in LondonEd Lewis, Head of London Residential Development Sales
Nevertheless, at a time of global turmoil, when other countries are also beset by spiralling inflation, London continues to be seen as an attractive destination for buyers. Despite current uncertainties, the UK’s political and legal systems are seen as fair and transparent in a global context. This means that London – with its theatres, restaurants and world-class education options – should continue to be a magnet for wealth, a bricks-and-mortar bolthole. History tells us that global uncertainty brings international buyers to London in search of a secure foothold.
The demand for homes in new developments is evidence of the desire to invest in London. There is more willingness to purchase off-plan because of the perceived potential for growth. Some of the eagerness to buy may arise from the awareness that there may not be a large amount of choice in the future. The pipeline of schemes is drying up as developers find it difficult to pin down contractors on construction costs. These continue to mount because of supply chain and labour shortage issues.
But buyers are still exercising discretion when they make an investment. Some are scrutinising service charges more than ever before, and all have become much more exacting in their requirements. A home must be best in class.
I would cite as an example of such quality the Regent’s Crescent scheme in Regent’s Park. It offers impeccable newly built apartments, with all the amenities, behind a Grade I listed new build façade originally designed in 1811 by John Nash, the era’s most celebrated architect.
Regent’s Crescent has 410 acres of Regent’s Park on its doorstep. Never before has proximity to a park been so important to buyers, which may be the most lasting impact of the pandemic.
London is a great place live, but also to work. Demand for best-in-class homes in central London is an indication that people are returning to the office, drawn by the ideal location and the convenience of services should they split their time between working from home and the office.
The rental market remains buoyant at present. The lack of stock means that it is a landlords’ market: the best since 2014.
The imbalance between supply and demand seems likely to persist – in the short term at least. But we will be watching what happens to inflation, and how this affects the Bank of England’s interest rate decisions.
Be prepared to move fast if a home becomes available for rent – it’s very competitiveOllie Mellotte, Head of Lettings, Chelsea
If the cost of borrowing continues to rise, this could trigger a slowdown in the sales market. Some buyers will become more cautious about the outlook for property values; a few will be unable to secure sufficient finance.
In such circumstances, some owners may well prefer to let out their properties rather than wait around for a buyer. This would give a boost to rental stock.
In the meantime, my advice to prospective tenants is to be prepared to move fast if a home becomes available. You have to have your ducks in a row. It’s very competitive out there, particularly if you aspire to renting a first-floor lateral apartment on a garden square, for example.
My patch, which takes in Chelsea and South Kensington, has appeal across the generations. Many people first come to the area because they are beginning their studies at Imperial College. After they graduate, they often choose to stay on, because of the combination of convenience and lifestyle.
In many cases, we help clients to find their first studio flat as students. We build relationships that last a lifetime, so we have many clients that have continued to seek out our services as they have moved on to larger homes throughout their lives.
It is possible to enjoy a slice of countryside in the garden squares, which is why they are the dream address. In Chelsea, St Leonard’s Terrace, with its views over Burton Court, is always in demand. Onslow Square, the largest of South Kensington’s garden squares, has everything: it is close to shops, restaurants and the London Underground.
The great schools, including the Lycée, are one of the reasons why families want to live here. They also like the variety of architectural styles. Americans in particular love the white-stucco houses of South Kensington.
The community feel in so many of the neighbourhoods is also a big draw. Chelsea and South Kensington may be locations that are famous worldwide, but that does not make them impersonal.
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Read the articles within In Focus: Prime Central London – Autumn 2022 below