A forecast made on Tuesday by estate agents Knight Frank suggests that property prices in prime outer London will grow by nearly 4 per cent over the rest of 2021, double the rate of prices in prime central London.
This trend is partly driven by the return of overseas buyers to the London property scene who have traditionally invested in more central areas.
It may defy precedent, but is not predicted to be a pandemic-induced one-off. Knight Frank’s five-year forecast shows growth in prime outer London will remain steady at between 4 and 5 per cent.
“Prime outer London” is defined by Knight Frank as covering Barnes, Battersea, Canary Wharf, Chiswick, Clapham, Fulham, Hampstead, Richmond and Riverside.
By contrast, prime central London spans the City of Westminster and the Royal Borough of Kensington and Chelsea, and parts of the boroughs of Hammersmith and Fulham, and Camden.
There had been little in the data to foreshadow this sudden growth, said Henry Faun, partner at Knight Frank Middle East.
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“There were some spikes in the market back in 2016 revolving around the EU referendum and Brexit, but since then things have been relatively steady,” he said. “The fluctuations were more in 2020 during lockdown.”
The same applies to offers accepted which, like prime prices, have gradually increased since March last year when the pandemic was declared, upending markets around the globe.
Yet the steady recovery from 2020’s initial Covid-induced shock has morphed into the “most active point in the market at any one time in the last five years”, said Mr Faun.
With many overseas buyers unable to fly to London owing to pandemic restrictions, domestic buyers have sustained the market for the past 18 months.
These buyers have acted like a centrifugal force, stretching London prime out of its traditional home within the SW1 postcode, and into areas of east and outer London not traditionally viewed as premium.
“A very large proportion of the prime central areas, those around Hyde Park, for example, do rely on overseas buyers,” said Mr Faun.
Their absence, along with the newly beefed up pound, has kept prices in and around Hyde Park “in check”.
Overseas buyers looking to London outer prime
The heat of pent-up overseas demand is now starting to be felt, however, and the inquiries aren’t solely about prime central London.
The trend was highlighted by Stuart Leslie, international sales and marketing director at property developer Barratt London.
“We have seen a lot of interest in east London, particularly from young professionals, in Canary Wharf – wanting to have a little bit better value for money than they will be getting in the west [of London] – and that value proposition has brought over [international] investors as well,” he said.
“So, whereas three or four years ago we wouldn’t have necessarily seen people from the Middle East investing in east London, now we’re seeing quite regularly both individuals and even family offices and institutional investments looking for real value for money and that strong rental demand, which is really driving the good rental yields” in the area.
Wherever this demand is focused, it is welcomed by Mr Faun, whose team has been increasingly busy.
“Prospective Middle Eastern buyers coming into the market are picking up the phone and sending through web inquiries or perhaps speaking with myself or the team in the Dubai office and saying: ‘We’re looking at buying real estate in London. Can you help us?’”
By Tim Kiek
Source: The National News
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