With the uncertainties of Brexit, Trump and the impending elections, will the London property market remain centre of the global stage?
Words: Trish Lesslie
Stamp duty hikes, Brexit and the US election sent the London property market into a spin last year. With the new Trump presidency, the triggering of Article 50 and the impending election adding to political uncertainty, a question mark hangs over the effect events at home and abroad will have on investment in prime central London property.
Still, there are plenty of reasons to believe that London’s property market will remain centre of the global stage. In fact, an increase in transactions in the last quarter of 2016 is a great indication that the capital is weathering the storms.
Developers and estates agents may be putting a realistic face on growth prospects in the prime central London property market (PCL), yet despite the turbulent conditions, the city looks set to remain attractive to those looking for a prime property investment.
Francis Burca, Sales Negotiator at Harrods Estates Chelsea, says the EU referendum triggered a surge in enquiries across all of its offices from international buyers and investors looking to take advantage of the weaker pound. ‘It is my belief that this will continue in 2017,’ he says. ‘London still has a magnetic pull and remains an attractive investment.’
Simon Tollit, Director of Central London Sales at United Kingdom Sotheby’s International Realty, says that while it’s impossible to predict how investors will react to the triggering of Article 50, ‘what we do know is that whenever uncertainty rears its ugly head the market undoubtedly slows and prices become flat.’
However, the drop in the value of the pound since last summer is an ongoing boon for overseas investors. ‘The fall in sterling against certain currencies following Brexit, particularly the dollar and the Swiss Franc, has definitely been a major contributing factor to the increase in buyers we have seen from Europe and Asia since June 2016,’ says Charlie Willis, Head of Strutt & Parker’s London Residential Agency. ‘For overseas buyers, this currency play instantly wipes out the formerly prohibitive cost of 15 per cent stamp duty on the most expensive properties.’
While JLL predicts price growth will be flat in 2017, it anticipates increases of 1% in 2018 followed by 3% in 2019 before stronger growth and greater normality returns to the UK, London and the PCL housing markets from 2020.
Price growth is predicted to be quite muted during 2017 and 2018, especially in higher priced locations, but with buyers poised to return once the waters are calmer
‘Price growth is predicted to be quite muted during 2017 and 2018, especially in higher priced locations, but with buyers poised to return once the waters are calmer. As we saw in 2009, we expect prices to ratchet up quickly before growing more steadily,’ says Jon Neale, Head of UK Research for JLL.
While some major investment banks are considering moving a small proportion of their personnel overseas, most experts agree that London still has no viable European competitor in financial services when it comes to its role in global markets. And despite uncertainty over Brexit negotiations, London remains one of the most desirable cities on earth to live and work, offering top-class cultural attractions. ‘The banks are actually very keen not to move jobs if they can avoid it, not least because their staff don’t generally want to move overseas,’ says Anthony Browne, chief executive of the British Bankers’ Association.
The fact remains that demand for property in the capital still outstrips supply. So despite global uncertainties, the London property market looks set to remain robust and continues to be a great place to live.
WHERE TO BUY NOW
New infrastructure projects, regeneration schemes and some swanky new developments mean there are some great buys to be had this year…
Experts predict SW1 will continue to be one to watch in 2017. Currently undergoing a total transformation from a boulevard of faceless office blocks to a lively residential area, this central London neighbourhood is set to secure its status as a PCL address as many developments reach completion.
‘When you consider how central Victoria is, and how close it is to landmarks such as Buckingham Palace, Westminster Abbey and the Houses of Parliament, it wasn’t an attractive place to live,’ says Robert Oatley of Knight Frank. ‘The infrastructure was poor and there weren’t many amenities. Now it is emerging as a smart, shiny new neighbourhood that may eventually rival nearby Belgravia and Knightsbridge.’
Among the new apartments, walkways, specialist foodie outlets and boutique shops is Nova, the Land Securities scheme opposite Victoria Station whose bold pink triangular central building is set to become a landmark. There are 170 flats in the mixed-use development, priced from £1.9 million, while the penthouses range from £11 million to £20 million.
Now a thriving centre for technology and the arts, average prices here are lower than PCL locations but prices have increased by almost 25% over the past three years. Following the transformation of derelict railway lands, the once seedy area is swinging into fashion thanks to some exciting new residential schemes.
The latest addition to this is Gasholders, 145 apartments built within a trio of Victorian gasholder frames and designed by renowned interiors company Wilkinson Eyre. Starting at £825,000 (on the market with knightfrank.co.uk).
Battersea, Fulham, Chiswick and Putney are in the top 10 capital’s postcodes as the most popular place for aspiring 25 to 44 year olds to live. At Fulham Riverside Barratt has launched its Townhouse Collection of just eight homes influenced by the distinctive riverside warehouses in the area.
The multiple floors provide a range of alternative layouts with separate living quarters, games rooms or a contemporary office space. A short walk from Imperial Wharf station, the five and six-bedroom townhouses feature a personal lift to all floors, accessed from the underground basement car park. Prices start from £3.9m for a five-bedroom, five-storey townhouse. Completion is expected in late 2020.
While luxury apartments are springing up across the city, traditional townhouses – whether new-build or remodelled – remain ever-popular with purchasers. ‘We are finding that townhouses command a premium in the luxury London market with many people still attracted to the classic style of a townhouse,’ says Charlie Killeen, Director at Dexters Notting Hill Estate Agents.
‘Those that have been modernised but retain a period façade or historical features are especially coveted as they offer the perfect balance. The variety of townhouses available for sale at the moment in terms of architecture and interiors guarantees that this type of property can appeal to a wide range of tastes and price points.’