London’s booming prime and super-prime residential markets look set to go from strength to strength, continuing their ‘huge outperformance of the rest of the market’, fuelled mainly by overseas interest. But at the other end of the spectrum, a ‘perfect storm’ for affordable housing provision may throw that picture into sharp relief.
Those were some of the main issues raised at the Prime Central: London’s booming residential market breakfast talk, held at the NLA yesterday morning. CBRE head of residential research Jennet Siebrits said that there had been an 18% price growth in prime over the last year, and a third of properties in Kensington and Chelsea now cost over £1m, eight times higher than their equivalents in Barking and Dagenham. And although the market has ‘loosened’ somewhat, said Siebrets, there has been a dramatic fall in the number of available mortgage products. ‘Unless you have a deposit and a high income you can’t afford to buy’, she said.
However, 75% of the prime resi market is being snapped up by foreign buyers, with the south-east Asian market becoming a particularly important strand. The Russians, said Seibrets are keen on ‘bling’ by the park, the Singaporeans are strong on meticulous, heavy research, and the Hong Kong investors are more prepared to go ‘off piste’, while Turkish investors represent a ‘real growth area’. CBRE’s visits to exhibitions abroad have told the firm that buyers are not just interested in prime central London, and of the top 10 selling schemes in the capital, seven are selling to Asia. So foreign buyers are important, said Siebrets, especially with construction levels ‘woefully’ below target and a ‘massive collapse’ in completions, along with the credit squeeze and a fall in buy-to-let. Foreign buyers had helped to keep development going, she said, and despite touchiness about the influx from some quarters, they are a much-needed ‘mechanism’, especially since some 53% of the population is from overseas anyway. ‘Why shouldn’t we let them buy property?’ she said.
The breakfast talk also heard from Julian Barwick, director of Development Securities, who warned that the bubble could burst if the Euro collapsed and Sterling strengthened, discouraging the overseas investor. But Barwick also pointed to shops and restaurants he sees in ‘rude health’ as proof that empty flats were not as yet ghettoizing areas, and that perhaps we were all simply a bit ‘miffed’ and jealous of this ‘stellar export’.
Westminster City Council operational director of city planning Barry Smith warned that a ‘perfect storm’ was brewing for affordable housing with new legislation threatening to push people out of the centre. The £5.2 billion of overseas investment in London residential over the last year is more than the government has invested in affordable for the whole of England over the last four years, he added. But overseas investment has always been a characteristic of central London, albeit where anecdotal evidence suggests that a third of the new residential on the South Bank, for example, lies unoccupied. Finally, SHH managing director Graham Harris took the audience through a few design trends in the sector. The journey ranged from the difficulty of designing kitchens for different international clients with different attitudes to eating in and out, to a growing focus on communal areas in residential schemes – sometimes dining spaces, sometimes rooftop spaces or clubs in ‘vertical city’-type developments. There was also, said Harris, a ‘huge demand’ for wine cellars and art galleries, as well as space to show off high net worth individuals’ car collections – plus car lifts to bring ‘the car of the day up.’
David Taylor, Editor, New London Quarterly