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Prime Central London property market review

publication date: Feb 17, 2010
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PROPERTYdrum LondonPrime Central London – this is ‘property speak’ for the most desirable addresses in the world’s favourite city.

Several postcodes make up this area, SW1, 3, 5, 7 and 10, plus W8 and W14, more attractively known as
Westminster, St James, Pimlico, Belgravia, Chelsea, Knightsbridge, Kensington, Notting Hill and Holland Park. In these London ‘villages’ lie leafy squares, sumptuous crescents, secret streets and hidden mews where horses once slept – now expensive but cosy little escapes from the frenetic but elegant London scene.

Westminster – home to English politics and politicians, with mansion blocks and river views. St James’ – all palaces and parks and Pimlico, which isn’t all gorgeous; you have to know where to look. Belgravia – simply beautiful, with a breathtaking selection of properties from the traditional white stucco fronted listed mansions of Eaton Square (£27 million) to the glistening new Foster & Partners designed / Candy brothers decorated and furnished apartments in Chesham Place (£39 million).

Belgravia’s Squares have huge flags flying on the world’s finest embassies, extravagant window boxes filled with geraniums and the bay trees on the porches are simply mandatory. Knightsbridge – so much more than just Harrods, several lovely squares, big mansion blocks and a surprising variety of architecture, with more stucco nudging bright red brick Dutch gabled buildings. Sloane Square, Cadogan Square, Lowndes Square, so many desirable homes.

Chelsea – its charm lies in its reputation as the home to both dukes and dustmen. Maybe so, but buying a home here is still pricey, the least expensive properties are still over £200,000 and you might have to leave the cat somewhere else. It is also said that 50 per cent of homes in Chelsea is unlived in for most of the year; some of it is, of course, squatted instead but the locals don’t really chat about that. South Kensington, in SW5 with its neighbour, Earls Court, is another rather ‘pick and mix’ area. Sometimes describe as ‘Saudi Ken’ – but only in the posh par – or Kangaroo Valley; South Ken is also home to students, backpackers and othe transient workers. However, South Ken its share of beauties as well, with ‘The Phillimores’, a lovely enclave of Victorian villas, one of which is for sale, needing to refurbishment, for £20 million. Holland Park is more of the same, with superb houses and apartments. The good news is that it is possible to find a family home with a garden for less than £1 million, which is something to remember if the Liberal party is, perchance, elected.

Shopping in LondonAnd then, Notting Hill, made memorable by its annual Carnival and the rather more soppy movie of the sam name starring Hugh Grant and Julia Roberts. Notting Hill is cosmopolitan, celebrity studded, trendy, noisy and irresistable. Extensive gentrification has taken this area from bijou, to, dare we sa it, a little brassy but somehow it keeps its feet on the ground with the wonderful Portobello market and blend of ethnic cafes and smart bars. And that famous ‘blue door’ of the bookshop is long gone.

The home of our own Royal Family, countless other royals, oligarchs and sheikhs, the landed gentry, the nouveau riche and, of course, the famous and infamous, London is home to a veritable ‘Who’s Who’ volume. Trendy Notting Hill boasts David (call me Dave) Cameron and George Osborne. Richard Branson is more upmarket in Holland Park, while Jemima Khan, Madonna (maybe, it’s hard to keep up), Liz Hurley and Hugh Grant still favour Chelsea. In Belgravia you may rub shoulders with Margaret Thatcher, Nigella Lawson or Roman Abramovich. One could go on, forever.

They live here because it is the hub of the universe; every hotel, restaurant, bar and club is a celebrity spotting opportunity. The shopping is among the best and expensive in the world; private art galleries, interior design houses, jewellers, couturiers and designer baby shops that would make you drool.

Bijou boutiques supply the necessities of life like designer wear, soap and bathroom tiles and their ownership revolves on a fast spinning cycle. However, it has to be said, there are some with staying power like Caroline Charles, Bruce Oldfield and the General Trading Company. Peter Jones and Harrods are the hubs of mainstream local retailing for the most of RBK&C (The Royal Borough of Kensington & Chelsea). Locals don’t go to Harvey Nicks, except to watch the WAGS in the fifth floor bar.

Central London pricesLondon Transport offers every opportunity to get around but not all of it is as desirable as these residents might like. The car remains king and residents within the congestion charge only pay 10 per cent to be free to travel in and out of the zone. The downside is that parking is very much at a premium. So much so that a property with parking facilities can command a premium of up to £100,000 over a similar property without the facility. Garages change hands at hilarious prices; even miniature electric cars need to be parked somewhere. Having said that, the Tube does do a grand job, with a few holes, notably in Chelsea and Kensington where it can be a long walk to the nearest station, so Nanny tends to need a car anyway. The buses and tubes are entertaining, once you have an Oyster Card the capital is your lobster, although getting to Heathrow in this way can be a strain and the tourists can make getting a seat a nightmare. The closest helipad is though, just a whisper away, across the Thames at Battersea.

Samuel Johnson certainly spoke the truth when he said, “When a man is tired of London he is tired of life; for there is in London all that life can afford.” It is almost impossible to imagine having seen and done everything in this ‘Prime Central London’ area alone, without extending the challenge to the whole of the capital. There are famous landmarks – Buckingham Palace, The Tower of London, Trafalgar Square... fabulous parks – the lungs of the city – Hyde Park, Regents Park, and St James’ Park.

Cathedrals, abbeys and exquisite small churches abound, while other dramatic buildings house some of the nation’s finest art galleries and museums.

St. Paul's CathedralMore jolly perhaps are the ‘attractions’ old and new. Regent’s Park Zoo, the London Eye, river activities, including the amphibious ‘frog’ tour and all manner of pleasure cruises. The regular pomp and circumstance of the Changing of the Guard, Armistice Day, Royal Weddings (and, indeed, funerals), the London Marathon and the previously mentioned Notting Hill Carnival, never fail to delight tourists and sometimes, even, the

Culture vultures are possibly best served here with a host of theatres, cinemas, concert halls and thousands of pubs, clubs and bars offering live music (and other types of entertainment) every night of the week. Seasonal specialities include the fabulous open air skating rinks at Somerset House and the Natural History Museum and the daddy of them all, the Winter Wonderland in Hyde Park, offers a Big Wheel, a circus and a bungee and a skating rink. In summer the attention turns to open air picnic concert venues with all music genres catered for and lazy Sunday afternoons a speciality. There is so much activity available in London that many residents feel the need for frequent trips to the country to get away from it all.

Giles Cook, Director at Chesterton Humberts, Chelsea: “Chelsea has quite a diverse housing stock – everything from family homes, buy-to-let apartments, pied-a-terre apartments to mews houses. In general, prices start from around £300,000, rising to some of the most expensive property in the world.”

London propertiesTim des Forges, Partner, Residential Flat Sales, WA Ellis: “We specialise in all types of residential property from studio flats to the largest developments and mansion flats. In Knightsbridge, Belgravia and Chelsea many of the area’s freeholds are owned by the Landed Estates. Most flats thus remain leasehold, ranging from five-year leases upwards. This gives huge diversity in what we sell and also demands experience in the often complex detail of leases and possible lease extensions.”

Charles McDowell is Director of McDowell Properties, a prime London property consultancy. He buys and sells properties over £5m. “Prime residential property remains extremely scarce in London. With the limited stock available, prices may rise further although more stock should begin to appear in the next couple of months as sellers become more convinced by the market.”

Jacqueline Ironside, Property Consultant: “The Lettings market is buoyant; those who have chosen not to sell have often let instead, but there are fewer corporate buyers around. Our market is very specialised; high value buyers, sellers, landlords and prospective tenants require a high level of personal service and with a shortage of properties on the open market, property consultants have to use their contacts and reputation to meet the needs of their clients.”

Martin Bikhit, MD, Kay & Co: “Our main market is large family houses, mews houses and luxury apartments. We have seen a decrease over the last year in the number of properties on the market, but there has been a large increase in the number of motivated buyers seriously looking to buy properties. That said the majority of money is coming into the middle and upper ends of the market with less interest at the lower end of the market.”

Gary Hersham, MD and Partner, Beauchamp Estates operates in residential and commercial sales and acquisitions, and in lettings. His main market is acquiring and reselling developments and also in individual top end residential sales. “There is still a shortage of good stock in central London and most certainly there is demand – the number of applicants has increased exponentially throughout 2009.”

James Bailey, Head of Sales at Henry & James: “There hasn’t been a huge increase in stock coming on to the market but the quality of the housing stock coming on now is definitely improving and the number of new instructions has been steady. We have had significant interest from buyers and have applicants. We saw a small drop in applicant levels in the run-up to Christmas but compared to earlier in the year, applicants are much more focused and we have seen a huge increase in viewing levels. Prices are up anywhere from five to twenty per cent, depending on the property and location.”

Tom Dogger, Director, Winkworth Knightsbridge & Chelsea: “There has been no increase in the numbers of properties on the market but there has been a substantial increase in demand; 40 per cent greater than last year. Due to the lack of stock, prices are up by at least 10 per cent.”

Guy Meacock, Associate, Prime Purchase: “I work in the Prime Central London team, and Prime Purchase are Buying Agents. We act solely for purchasers in the search and acquisition of prime residential property in London and the country. We aim to acquire the ‘best in class’, and specialise in properties in excess of £1m. Over half of the deals Prime Purchase transact in an average year are done so ‘off-market’, or before marketing has started - a market which would largely be ‘out of bounds’ for a normal buyer. With interest rates so low, and a false perception that the market is depressed, sellers are biding their time.”

South Kensington townhouseAlex Thompson, Director of Winkworth Notting Hill: “I specialise in residential sales of all property types from studios to large family houses, from £300,000 to well over £10,000,000. There have been more properties on the market in the last six months as the market has strengthened, but there is still a severe shortage, a fact which has been underpinning the strength in prices. Buyers have certainly increased both in number, but also in their level of commitment, a change which began during the second quarter as sentiment shifted to the positive.”

Tim des Forges, WA Ellis: “Low interest rates and the weak pound have, since March, caused a bottleneck in the housing market. With the former remaining low, owners often get a better yield by letting out their property than selling and having money in the bank. This immediately restricts supply. Prices are certainly up on nine months ago and this is fuelled by the combination of the two factors above; buyers demand outstripping supply. Although some sales are at levels not seen since mid 2007, this is predominantly on the prime floors in the best garden squares. Outside of these, properties might get 30-50 viewings but perhaps only 4 or 5 offers and this might be after 5-10 days. In 2007, offers would be on the table on the first day. The core market at the moment is 2-3 bedroom flats up to £2.5m.”

Charles McDowell, McDowell Properties “Properties that are the best of prime, right across the price ranges, are achieving in excess of 2007 prices. Thanks to the stock shortage in London and the number of keen foreign buyers, properties in excellent locations and especially those in immaculate condition, are regularly achieving new price levels. We recently sold a superb two bedroom flat in Cadogan Square for £1.4m, 15 per cent over what would have been expected in peak 2007.”

Giles Cook, Chesterton Humberts: “Prices are approximately up 10 per cent on last year in prime central London and particularly in Chelsea/Knightsbridge area.”

Gary Hersham, Beauchamp Estates “The prices up to £3-3.5m are certainly going up since this time last year.”

Martin Bikhit, Kay & Co, “Prices are up, most definitely, probably between 10 and 15 per cent on this time last year so only 5 per cent or so off of 2007 levels. That said certain properties in super prime locations are being sold in excess of these levels.”

Guy Meacock, Prime Purchase: “Demand overwhelmingly outweighs supply for a number of reasons. Interest rates are low, therefore buyers perceive bricks and mortar to be a more attractive, and tangible asset class. Foreign buyers have been a major feature of the prime markets, particularly in London, spurred on by a weak pound which saw them buying at effectively half price off the market’s 2007 peak.”

Alex Thompson, Director of Winkworth “No bargains. Prices are very much up. Prices have recovered by well over 25 per cent in real terms from last year’s, clawing back much of the 35 per cent they lost. Some prices are in fact beating those achieved at the height of the market.”

Montagu Square with Kay & Co.Tim des Forges, Partner, WA Ellis. “Many of our European friends, notably Italians, have taken full advantage of the exchange rate by buying in London. Although it puts a disadvantage on sterling buyers, it caused this mini boom which accelerated in September.”

Charles McDowell: “We have seen an increase in European buyers, particularly Italians, as the current strength of the Euro represents good value for Europeans wishing to invest in UK property.”

Giles Cook, Chesterton Humberts: “We have seen a considerable increase in buying interest as the housing market began to recover much more quickly than anyone would have expected, predominantly thanks to the weakness of Sterling against the Euro and other major currencies. Chelsea and the surrounding area has always been a firm favourite with European buyers and we have seen many Italians in particular, keen to take advantage of the strength of the Euro. Typically Italian buyers look for properties with 2-3 bedrooms, between £1-2m.”

Martin Bikhit, Kay & Co, “Lots of Europeans, in particular, Italians, Greeks and Cypriots are looking to take advantage of the strength of the Euro against sterling.”

Gary Hersham, Beauchamp Estates: “The Brits are leading the way followed by the Eurozone purchasers, and of course Russians and the Middle East are still strongly in the marketplace.”

James Bailey, Henry & James: “British buyers, Far Eastern, and the odd European including Greeks, Italians and French.”

Guy Meacock, Prime Purchase: “We have seen a marked increase in buyers from the Far East, most notably China and Hong Kong. Europeans continue to want to invest in London, especially Italians who sense that the market, rightly or wrongly, is offering value once again. They have also been encouraged to invest their money here due to a tax amnesty by Silvio Berlusconi. Foreign buyers have been particularly active in the core investment bracket, between £1m and £3m.”

Alex Thompson, Winkworth: “Europeans are strong. This is of course supported by their comparative currency advantage, however not all are buying from abroad, many are buying in; as Notting Hill is so internationally diverse.”