14th May 2014
Industry news has been somewhat dominated in recent weeks by the sale of Penthouse D in London’s iconic One Hyde Park development for £140m in ‘core and shell’ state (ie no internal walls!) to “an Eastern European buyer”. The price is yet another high water mark for an apartment in London and evidence that even at the very top end of London property, there are still international buyers looking to diversify and protect their wealth in the capital’s bricks and mortar.
Despite the strengthening pound, prime Central London (PCL) property rises have continued to rise in recent weeks as both international investors and domestic owner occupiers continue to push prices higher. According to the Knight Frank Prime Central London Sales Index, values rose 0.8% in April, the measure’s 42nd consecutive monthly rise. However, in stark contrast to the early stages of the post-financial crisis rally, it is secondary London locations such as Wapping and Canary Wharf that are now pacing property price gains in the Capital.
Indeed, within Central London, the discrepancy in recent price performance is now increasingly pronounced. According to Savills, Marylebone, good value in the context of PCL, saw prices rise 4.2% in Q1 and some 19.3% in the year to end-March. By contrast, prices in Chelsea, Knightsbridge and Belgravia rose just 0.6% in the first three months of 2014 and only 5% in the twelve months to end-March.
We believe that the strength in these secondary areas partly reflects the greater influence of domestic buyers and partly reflects the changing mood of investors looking to get more value. Buoyed by low interest rates, wage growth and a broader economic recovery that is gathering pace, house prices across the UK have continued their recent positive momentum.
According to building society Nationwide, house prices across the UK rose 1.2% in April and some 10.9% in the year to end-April. According to Nationwide this is the first time that annual price growth has reached double figures in four years. Meanwhile, the latest lending volumes figures from the Council of Mortgage Lenders show mortgage levels in the UK some 43% higher than a year ago, fueled in no small part by the government’s Help to Buy scheme.
Good value is hard to understand let alone find in prime Central London property. But very occasionally, good value is obvious and compelling. At Black Brick we believe there is now a powerful opportunity for potential buyers in some of the capital’s freehold houses – which have been left significantly behind in price terms when compared to flats.
We have seen this valuation disparity first hand in a number of transactions. We recently completed on a £10.75m freehold house in Belgravia for an international client. At 5,500 sq/ft and with attractive lateral room sizes, the property boasts large entertaining spaces and we acquired the property for an extremely attractive £1,900 sq/ft. By comparison, just round the corner, a number of apartments in a relatively new development recently changed hands at prices in excess of £3,800 sq/ft.
This scenario has arisen due to a number of factors. However, in the main it reflects the overwhelming focus of overseas buyers on lateral flats with on-site concierge services. We also believe that there is a widely-held misconception that the majority of London’s houses are narrow and offer poor entertaining spaces.
While accepting that underground parking and on-site concierge services clearly warrants a premium, we believe the disparity in price per sq/ft has now gone too far.
For many of our clients, lateral apartments are likely to remain the focus of attention. But with the additional costs of service charges that can run as high as £30,000 a year and high quality independent concierge services available across London, we believe that potential buyers should not dismiss the capital’s housing stock quickly. Moreover, not all of our clients need or want these additional services.
In particular, for many the attractions of serviced apartments are more about having someone look after their property while they are away than about getting tickets at short notice to a concert at the O2. At Black Brick we set up our own highly regarded Vacant Care Service to provide our clients who spend significant periods away from their London property with exactly that peace of mind. We are also able to arrange a wide variety of other services for clients who do need help. For more information about our Vacant Care Service call Sophie Amasha on +44 (0)20 3141 9861 or email firstname.lastname@example.org
In the rental market, demand from a buoyant corporate domestic market is resulting in small rental price rises. However, overall yields remain low by historical standards. Against this backdrop, void periods can therefore make the difference between making money and losing money.
Black Brick’s Property Management Service has grown quickly since its launch and we believe this is down to the very high levels of bespoke service we offer our clients relative to the mainstream high street agents including the so-called ‘top end’.
Our experience is that happy tenants don’t tend to move properties. We therefore see our Property Management job in the straightforward but often time-consuming context of keeping our clients’ tenants happy and in place. By providing tenants with a dedicated contact and responding and resolving all issues promptly and courteously, we aim to maximise our clients’ returns by doing everything in our power to keep tenants content and avoiding void periods.
Our property acquisition of the month in May is one that perfectly demonstrates what Black Brick is all about. Our international client was looking to buy a classic first floor flat in South Kensington for his two daughters. Due to our strong relationship with the vendors selling agent we were able to gain access to the property prior to it ever reaching the open market. The property benefited from a terrace and was located in Cranley Gardens, one of the areas’ best streets and just a short walk from both Fulham Road and the King’s Road. We had recently completed another deal with the same selling agent who therefore knew us and our high quality client base well. We were therefore offered the apartment first and were able to complete the deal without any other potential buyers ever viewing the property. Click here to read more.
According to the 2014 Sunday Times Rich List a total of 104 sterling billionaires, with combined wealth of some £301bn, now call the UK home. 72 of these BNWIs (billion+ net worth individuals) are inevitably based in London, making the UK capital home to the highest concentration of billionaires by a significant margin. According to the Sunday Times, Moscow has the second highest billionaire population with 48, followed by New York with 43. Most of the billionaire’s on the UK list were born overseas, reflecting the on-going attractions of the UK in general and London in particular to the world’s international business elite.
We are delighted to reveal that Black Brick has once again been named one of Eprivate client’s Top 25 Residential Property Buyers 2014. The aim of this highly prestigious list, according to Eprivate client, is to identify, recognise, introduce and promote the Top 25 Residential Property Buyers acquiring prestigious residential property for high net worth and ultra high net worth clients. Eprivate client survey approximately 65 Residential Property Buyers and the Top 25 is based on data received on areas such as number of directors, number of buyers, the number of staff, fee structure, fee income and the company selling policy.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.