Being the capital and the largest city in the UK, London is widely regarded to be one of the most important cities in the world. It has one of the largest financial centres, welcomes more visitors than any other city year on year, is a leading investment location and is home to more ultra-high net worth individuals than any other city.
There is often a focus on London’s prime property market; the areas of Belgravia, Knightsbridge, Chelsea, Mayfair, Kensington and Holland Park are all included under this umbrella term for the most exclusive places to live and own a property in London.
The question remains – is property in prime central London a good investment?
Residential property values in prime central London have been reported to have fallen almost consistently quarter-on-quarter for more than five years and prior to Covid-19 residential values in prime central were 20 per cent below their 2014 peak, despite the Boris-bounce at the beginning of the year.
Since the restrictions on the property market were lifted in mid-May however, activity has resumed though prices have continued to soften, with real estate agent Savills recording a 1.1% fall according to their prime central London index.
At the beginning of 2020 forecasts cited that property prices across the UK were set to grow, the pandemic has delayed recovery, especially of price growth in prime central London.
Demand for homes in prime central London
The pandemic saw many leave cities and head to the countryside, central London was no different and many of those who usually reside in the prime London areas chose to relocate to the country, to their second homes in the UK or overseas.
Factors that have typically caused a surge in activity in other parts of the market in London and across the regions since lockdown restrictions were eased do not apply in the same way to those who typically have a residence in prime central London as it is often the case that they have multiple homes – they can afford to take their time making any property-related decisions. Prime central London is very much a market place where there are far more discretionary buyers than there are needs-based purchasers.
This said there has been a noticeable increase in sales agreed and transaction levels reported in July. International real estate agent Knight Frank believes that the decline in sales and prices has now “bottomed out” and that from here onwards we will see recovery.
Overseas interest in UK property
The appeal of UK property to overseas buyers fluctuates with the markets and the economic and political climates.
At the present time, the weak pound, political unrest at home and planned visa reforms have recently made London particularly attractive to wealthy Hong Kong residents driving a spike in demand.
London is often the first place an overseas buyer will look for a property to buy as its likely the place they will have read the most about and to them the capital might present the safest place to invest.
London prime property as an investment prospect
Whilst prime central London is widely regarded as a safe haven for investors, much of the UK has the same status – over time the entirety of the UK property market has proven its resilience.
For investors looking for impressive returns, it’s unlikely that prime central London will deliver the same numbers as can be found with other opportunities across the country.
A carefully planned investment in a location that is yet to realise its full potential with strong credentials is where investors will find the greatest returns.
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