According to the latest insight report from Beauchamp Estates, the frenzy of activity that has already taken place at the start of 2013 is set to continue as although global uncertainties remain, the prime central London the market remains strong and buoyant.
Measures announced in the Finance Bill in December 2012 clarified the position for non-natural persons that is company purchase. The increase in stamp duty from 5% to 7% for individuals purchasing properties in excess of £2 million has been absorbed into the financial landscape,’ said Gary Hersham, managing partner at Beauchamp Estates.
‘We are continuing to see a confident market place, demonstrated by a substantial rise across our markets, with Belgravia and Knightsbridge, despite heavy competition from other prime central London locations, remaining the hot spots,’ he explained.
‘Testament to the unashamed appeal of London, overseas purchasers continue to flock to secure a holding in one of the world’s safest investments and remain the driving force behind the market, particularly at the upper end,’ he added.
Research by the firm has found that property owners in the prime central London market come from across the world, attracted to London for its cultural diversity, economic and political stability and renowned financial institutions. Continued weakness in the pound has further boosted the attractiveness of investing in central London.
‘Those benefitting from the exchange rate include Singaporean buyers purchasing a property in central London who today will find it 10% cheaper than five years ago. The strengthening of the Euro against Sterling, has added to the appeal of central London property which remains at an all time high to the European buyer. In particular the French and Italians dominate the market, not only relocating here but buying substantially for investment purposes,’ said Hersham.
The firm has also found that the domestic market has been buoyed up by relaxed lending boosted by the launch of the Funding for Lending Scheme in August which has reduced the lending costs of financial institutions. Mortgage approvals are rising and the Council of Mortgage Lenders forecast a further 10% rise in lending in 2013.
Although many buyers in prime central London are cash purchasers, recently released Census data shows that around 38% of owner occupiers here are using mortgage finance to buy their properties. The figures range from around 30% in Kensington and Chelsea to 46% in Notting Hill and Holland Park.
The super prime market of central London was the star performer of 2012. ‘We saw some exceptional property sales in 2012 across the prime central London area. In the market over £10 million the average price paid per square foot rose by 16.8%. Buyers at the very top echelon of the market would now need to pay an average of about £3,000 per square foot to obtain the finest properties,’ explained Penny Court, the other managing partner with the firm.
‘Encouragingly, the number of sales in this price bracket rose by 13% compared to 2011 levels. Looking ahead, demand for the most prestigious addresses, and in particular trophy houses, seems unstoppable. It is likely that this end of the market will continue to outperform over the course of 2013,’ she added.
An analysis of the recently produced Census data shows the international influence of the residents of prime central London. Just under a fifth of residents in South Kensington, 18% of those in Knightsbridge and 16% of those in Mayfair have a second address outside the UK. This compares with an average of just 2.7% of residents across London as a whole.
Court points out that the number of French nationals resident in London is only expected to expand as President Francois Hollande presses ahead with plans to introduce a 75% upper income tax rate. ‘Since the introduction of the government’s flagship campaign, a number of France’s wealthy individuals have already moved overseas to more efficient fiscal regimes with London proving a popular choice, where they can feel truly at home,’ said Court.
Indeed, an analysis of all overseas residents moving to central London in 2011/2012 shows that 12% moved from France alone.
‘The influx of wealthy overseas buyers to central London and increased demand for high end luxury new developments has spurred developers to build in this lucrative market. As a result there is a new wave of luxurious developments at various stages of the construction process,’ Court added.
