By Inessa Falina, Head of Property Services, Ashton Rose (part of Oracle Capital Group)
London property prices continue to rise, driven by foreign investment
It will come as no surprise to those familiar with the London property market that prices have risen 10% since January 2013. This is a continuation of a long term upward trend which has seen the average property price in Central London rise by 600% over the past 16 years – from £221,679 to £1,360,000, according to the UK Land Registry.
The market is driven in large part by non-UK residents who were behind 85% of all London property purchases in Q3 2013, with Chinese, Russian and Middle Eastern buyers the most active investors of all. Increased demand from foreign investors has resulted in prices for new housing developments almost doubling over the past 4 years.
Foreign interest in London property is bolstered by the favourable GBP exchange rate and appealing UK mortgage terms, with UK banks currently offering the most attractive mortgage products for the last 14 years. Foreign investors are also attracted by the UK’s low level of inflation and the protection offered by diversifying their wealth through real estate.
Demand outpacing supply
The number of property sales has actually decreased in the last decade (5,300 transactions on 9,620 in 2002), but this represents waning supply rather than demand for properties which remains as strong as ever.
Current market statistics showing an increase in the number of properties on the market are skewed by a trend of owners simply testing the market to assess the level of interest in their property, which can help determine its value. London property owners are also now far less likely to reduce the asking price on their property than sellers in any other property market, with 32% of Londoners reducing the asking price in 2013 compared to 37% in 2012.
London’s most prestigious locations
London’s most sought after properties are found in the central areas of the City of Westminster, Kensington and Chelsea. There are only 200,000 residential properties in these areas, the average price of which exceeds £1.5m. These districts remain unaffected by unemployment, inflation, economic instability and the uncertainties which surround the rest of the UK’s property market since international demand for these properties remains as strong as ever.
Property prices in these areas have quadrupled over the last 16 years, with annual growth at 9% and prices expected to continue increasing for the foreseeable future. Indeed, some joke that current prices mean a piece of land under a doormat in Kensington or Chelsea is worth over £3,500.
Not an ambassador? You can still live in an embassy
Prompted by ever increasing demand, property developers are beginning to launch numerous projects which will transform former commercial buildings into residential properties such as the recent full renovation works on the area around Victoria’s mainline and underground stations in a project expected to cost around £2 billion. New commercial and residential buildings will be constructed across the area, and the existing coach station will be relocated to a site in West London, rendering the Victoria area quieter and more attractive to investors.
Another new target for London’s property developers are the capital’s old embassies, often sumptuous buildings full of characters in London’s most desirable areas. This is illustrated by the recent sale of the Kazakhstan Embassy in South Kensington which was sold for £8.6 million and which will be redeveloped into a spacious family home. Similarly, a £250 million mansion overlooking Buckingham Palace and Green Park with 45 rooms, currently in need of substantial restoration, will be transformed into one of the city’s most luxurious residences by 2016.
Purchase a piece of history: Churchill’s bunker for sale
In July, a building of exceptional historic character was put on the market in London: an old underground station that served as Winston Churchill’s secret command centre during the Second World War. This was also where Adolf Hitler’s deputy was reputedly detained for interrogation in 1941 following his capture in Scotland.
The Ministry of Defence expects the 2600 sqm station to sell for around £60 million. Part of the former Brompton Underground station and located near Harrods in Knightsbridge, one of London’s most prestigious neighborhoods, the property includes a military training hall, hangars and tunnels. It would be difficult to find another property steeped in as much British history and character.
On all matters related to the acquisition of property in the UK please contact us by e-mail info@ashtonrose.com or phone +44 (0) 207 935 7564.
