Transaction levels in the third quarter of 2012 increased by 4% compared with the previous quarter a continued shortfall in supply meant that average price per square foot values increased by 11%.
This increase can be partly attributed to the higher premium attached to new build sales, which accounted for 56% of all sales, according to EA Shaw’s residential report which covers the prime central London market including Covent Garden, Soho, Fitzrovia, Bloomsbury, St James’ and the City fringes.
‘With the global economy continuing to show signs of volatility, international purchasers are still searching for a safe haven for their wealth. Central London property is still seen as a good investment, especially as capital values are on course to rise around 7% this year,’ said Lisa Hollands, head of residential at EA Shaw.
‘We anticipate considerable interest from purchasers in a number of new build and refurbished developments that are expected to come to the market in the final quarter of 2012 as demand continues to outstrip supply in the area, and buyers are still hungry for high specification, well located homes,’ she added.
A new record price for re-sales was achieved of £1,699 per square foot, beating the previous quarter’s record, shows the strength of the Covent Garden market.
UK buyers were the most dominant sector of the market over the summer, accounting for 56% of purchases, a 23% increase compared to the previous quarter. New build purchases made up 56% of total sales with UK buyers being particularly active in this market, accounting for 79% of purchases.
Central London residential rents rose 3% during the third quarter, an increase of 12% compared to the same period in 2011. The firm achieved a record rent of £64 per square foot for a 357 square foot flat in Floral Street, when the average rent normally achieved is from £45 to £55 per square foot. The bijou property was let at £440 per week, a 4% increase above the level set six months ago.
The highest rent per week in the area was also set last quarter, when the team achieved a record overall rent of £3,600 per week, 52% more than the previous record.
‘The central London lettings market continues to go from strength to strength with demand far outstripping supply. This is particularly the case with new build, as new stock is often let within hours of coming to the market,’ explained Hollands.
Transaction levels in terms of rental deals done rose by 31% compared to the last quarter and 8% more than the same period in 2011. The average rent increase of renewing tenants in the third quarter was 4%.
On the demand side, the tenants mainly comprised students and those working in the accounting and finance sectors. The number of students renting rose significantly, up 40% compared with the same period in 2011.
During the third quarter there was a 16% rise in European tenants, mainly attributed to students looking for accommodation before the start of university. Of employed tenants finance was dominant at 32% of all tenants.
