It’s no secret that London’s housing market has slipped over the last several years, largely due to an uncertain political climate and new stamp duty taxes. But in addition to recent evidence that the markets may be stabilizing, there are some London neighborhoods that experts predict will outperform others.
Prices for prime property in central London declined 1.1% in the year to February, according to a report by real estate consultants Knight Frank. Experts have noted that the decline is less than they have seen in the last few years, despite prices still being down 8% from their previous peak in August 2015.
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Although the consultants don’t expect a large rise in prices in the near future, there is optimism. Knight Frank outlined 18 “hotspots” for new development in the city in a February report, highlighting several areas where housing prices are likely to rise by 2021. The report, along with local experts, agree that some of the best bets include Mayfair, Earls Court, Lisson Grove and Kings Cross.Many of the areas likely to see the most growth “tend to be at the lower end of the value spectrum and have a lot more potential,” according to Abigail Heyworth, residential development partner at Knight Frank.
Why Mayfair is the Best Bet
Mayfair tops the list as an area to watch, according to the Knight Frank report released in February. In 2021, the projected value of property will be up £1,000 to £7,000 (US$1,408 to US$9,859) per square foot from today’s assumed present-day value for top-of-the-line new builds in the neighborhood, the report said.
Although the area already has high prices and is considered an affluent neighborhood, Ms. Heyworth said new developments and increased access to transit make the area a good bet for the future.
A report released recently by Mayfair-based agency Wetherell goes further, saying that the area has edged out Knightsbridge as London’s “top address.”
Wetherell commissioned the U.K.-based property market intelligence company Dataloft to analyze sales prices and lettings values over the last 17 years between 2000 to 2017.
“Five years ago we could see planning permissions and office-to-resi conversions halting the decline in Mayfair,” said Peter Wetherell, founder and chief executive at the eponymous agency. Even then, he predicted “Mayfair would eventually overtake Knightsbridge to become London’s most desirable address.”
Part of the reason, Wetherell’s report indicates, is new developments, including One Grosvenor Square, Hanover Bond and Audley Square. All in all, 501 new super-luxury residences are planned to hit the market over the next five years, with about 15% already completed.
Another factor: added transit. London’s new Crossrail, a £14.8 billion (US$23 billion) project that partially opened last year, will bring 10 new stations to the city, servicing 41 total. A new station at Bond Street is set to open in December 2018.
That new station at Bond Street will help residential prices in Mayfair, the Wetherell report said. In In 2017, apartment prices averaged £2,378 (US$3,348) per square foot. Those could rise to £2,600 (US$3,661) per square foot by 2021, according to the report, with top values potentially setting a record of £7,875 (US$11,087) per square foot by 2021.
Other areas around the new railway are also a good bet, including Earls Court, which is second on Knight Frank’s list of hotspots. Current prices there are £1,650 (US$2,323) per square foot, the report said, and could rise to £2,100 (US$2,957) per square foot.
That’s if the developments in the pipeline are accomplished, Ms. Heyworth pointed out. A masterplan for the area has been approved, and includes Lillie Square, which will create 808 high-end new homes on the 7.4-acre site of a former parking area on Seagrave Road.
“The plans look beautiful, but haven’t really started yet,” Ms. Heyworth said.
Mark Pollack, a founding partner of the London-based brokerage Aston Chase, is “backing Lisson Grove for strong capital growth potential,” he said.
It’s “an area of central London that has been largely overlooked, despite being [centrally located] and in very close proximity to Marylebone, St. John’s Wood and Maida Vale.”
Its location means it will see benefits from the Church Street Regeneration Plan, said Mr. Pollack, a project being pushed forward by Westminster City Council. That will bring new green space to the area, including a tree-lined pedestrian walk linking it with Marylebone Station. New developments and better transportation options will translate into better prices in the area, he explained.
Knight Frank projects that the Central London area’s price per square foot could reach £1,850, up from its current value of £1,400 (US$1,971).
King’s Cross is another neighborhood to watch, given the redevelopment the areas has seen in the last decade-plus.
It has already seen prices rise based on the already-delivered new development, according to Ms. Heyworth. Prices were less than £1,000 there 10 to 15 years ago.
But there’s more to come, including additional retail and restaurants, she said. Current prices there are are £1,600 (US$2,253) per square foot, but could be £1,850 (US$2,605) per square foot by 2021, according to the report.
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