RESIDENTIAL RESEARCH - A FRAGMENTED RECOVERY IN RENTAL VALUES STRENGTHEN - Knight Frank

 
NEXT SLIDES
RESIDENTIAL RESEARCH - A FRAGMENTED RECOVERY IN RENTAL VALUES STRENGTHEN - Knight Frank
RESIDENTIAL RESEARCH

 LONDON
 RESIDENTIAL
 REVIEW
 SPRING 2018

A FRAGMENTED RECOVERY IN
                           RENTAL VALUES STRENGTHEN   RISING RATES AND BREXIT
    THE SALES MARKET
RESIDENTIAL RESEARCH - A FRAGMENTED RECOVERY IN RENTAL VALUES STRENGTHEN - Knight Frank
LONDON RESIDENTIAL REVIEW SPRING 2018                                   RESIDENTIAL RESEARCH

                                          PRIME LONDON SALES MARKET INSIGHT
    KEY FINDINGS                          Though market performance has become more fragmented,
                                          some key trends are still discernible, says Tom Bill
    5                                     By the standards of the last four decades, pricing effect on price growth, as Figure 1 shows.
    Years since there has been a
    double-digit price movement in        movements in the prime London property market While the £5 million to £10 million price band
                                          have become less extreme.                           experienced the largest annual price declines
    either direction in PCL
                                                                                              between October 2015 and February 2017, it
                                          Prime central London (PCL) has not experienced
                                                                                              accounted for the strongest growth between
                                          a double-digit price movement up or down for
    9%
                                                                                              June 2017 and January 2018.
                                          more than five years, which is the longest run
                                          since records began in 1976. Meanwhile, the         The differentiation in performance between
    Rise in the number of transactions
                                          prime outer London index has not moved more         separate areas has also grown in the three years
    between £5 million and £10 million
                                          than 5% in either direction for almost three years. since the stamp duty hike in December 2014.
    in Q4 2017 versus Q4 2016
                                          As sales volumes and pricing stabilise after a          For example, the total number of transactions
                                          succession of tax changes, market performance           above £5 million in Chelsea rose to 26 in 2017
    26                                    has become more nuanced and fragmented.                 from 20 in the previous year, an analysis of
                                                                                                  LonRes and Knight Frank data shows. The
    The number of £5 million-plus         For example, the number of transactions in PCL          market initially experienced larger price drops
    transactions in Chelsea in 2017, up   between £1 million and £2 million fell 13% in the       than others following the higher stamp duty rates.
    from 20 in 2016                       final quarter of 2017 while there was a 9% rise
                                          between £5 million and £10 million, LonRes data         Elsewhere, pricing in Queen’s Park has started to
                                          shows.                                                  decline. Average values rose on an annual basis

    1%                                    This marks a reversal of an earlier trend following
                                                                                                  during the first six months of 2017, but by the end
                                                                                                  of the year, prices were down 8.7% as stamp
    Rise in transaction volumes in PCL    the introduction of higher rates of stamp duty in       duty-related price adjustments rippled out from
    in 2017 versus 2016                   December 2014.                                          PCL.
                                          The turnaround suggests higher transaction              Meanwhile, lower asking prices have
                                          costs have become more fully assimilated in             underpinned sales volumes in the Fulham house
                                          higher price brackets after an initially steeper        market more than the flat market. There was
                                          decline in trading volumes.                             a 24% year-on-year fall in transactions below
                                                                                                  £1.5 million (the price point below which most
                                          Meanwhile, overall transaction numbers rose 1%
                                                                                                  properties are flats) in the first nine months
                                          in prime central London in 2017 compared to
                                                                                                  of 2017 compared to a more modest 9.3%
                                          2016, LonRes data shows.
                                                                                                  decrease above that price point, Land Registry
                                          The changed tax landscape has had a similar             data shows.

                                          FIGURE 1
                                          Reversal of Fortune How the £5m to £10m price bracket became the strongest performer

                                                 PCL highest annual growth by price bracket
                                                     Sub £1m   £1m to £2m    £2m to £5m      £5m to £10m   £10m plus
                                          10%
                                           8%
                                           6%
                                           4%
                                           2%
                                           0%
                                          -2%
                                          -4%
                                          -6%
                                          -8%
                                                 Jan-15
                                                 Feb-15
                                                 Mar-15
                                                 Apr-15
                                                 May-15
                                                 Jun-15
                                                  Jul-15
                                                 Aug-15
                                                 Sep-15
                                                 Oct-15
                                                 Nov-15
                                                 Dec-15
                                                 Jan-16
                                                 Feb-16
                                                 Mar-16
                                                 Apr-16
                                                 May-16
                                                 Jun-16
                                                  Jul-16
                                                 Aug-16
                                                 Sep-16
                                                 Oct-16
                                                 Nov-16
                                                 Dec-16
                                                 Jan-17
                                                 Feb-17
                                                 Mar-17
                                                 Apr-17
                                                 May-17
                                                 Jun-17
                                                  Jul-17
                                                 Aug-17
                                                 Sep-17
                                                 Oct-17
                                                 Nov-17
                                                 Dec-17
                                                 Jan-18

                 TOM BILL                       PCL lowest annual growth by price bracket
                                                     Sub £1m   £1m to £2m    £2m to £5m      £5m to £10m   £10m plus
                 Head of London           10%
                 Residential Research      8%
                                           6%
                                           4%
    “By the standards of the               2%
                                           0%
    last four decades, pricing            -2%
                                          -4%
    movements in the prime                -6%
    London property market have           -8%

    become less extreme.”
                                                 Jan-15
                                                 Feb-15
                                                 Mar-15
                                                 Apr-15
                                                 May-15
                                                 Jun-15
                                                  Jul-15
                                                 Aug-15
                                                 Sep-15
                                                 Oct-15
                                                 Nov-15
                                                 Dec-15
                                                 Jan-16
                                                 Feb-16
                                                 Mar-16
                                                 Apr-16
                                                 May-16
                                                 Jun-16
                                                  Jul-16
                                                 Aug-16
                                                 Sep-16
                                                 Oct-16
                                                 Nov-16
                                                 Dec-16
                                                 Jan-17
                                                 Feb-17
                                                 Mar-17
                                                 Apr-17
                                                 May-17
                                                 Jun-17
                                                  Jul-17
                                                 Aug-17
                                                 Sep-17
                                                 Oct-17
                                                 Nov-17
                                                 Dec-17
                                                 Jan-18

                                          Source: Knight Frank Research

2                                                                                 Please refer to the important notice at the end of this report
RESIDENTIAL RESEARCH - A FRAGMENTED RECOVERY IN RENTAL VALUES STRENGTHEN - Knight Frank
PRIME LONDON PRICE AND RENTAL GROWTH, JANUARY 2018   JANUARY 2018

3                                                               4
LONDON RESIDENTIAL REVIEW SPRING 2018                                                                                                                                          RESIDENTIAL RESEARCH

                                                                                                              PRIME LONDON LETTINGS MARKET INSIGHT
     KEY FINDINGS                                                                                             Supply levels have declined as more property owners sense the
                                                                                                              sales market bottoming out, says Tom Bill
     28
     Consecutive months of quarterly rental
     value declines in prime central London                                                                   The key feature of the prime London lettings                                                               In the super-prime lettings market, there is
                                                                                                              market over the last several years has been                                                                also anecdotal evidence that more tenants are
                                                                                                              the high level of supply versus the historical                                                             putting a clause in their tenancy agreement to

     -19%
                                                                                                              average.                                                                                                   give them the first right of refusal to buy at the
                                                                                                                                                                                                                         end of the tenancy in a so-called “try-before-
     Decline in the number of properties                                                                      Uncertainty in the sales market pushed supply
                                                                                                                                                                                                                         you-buy” agreement.
     listed for rent in Q4 2017 versus                                                                        up as more property owners decided to let
                                                                                                              rather than sell. At the super-prime (£5,000-                                                              As a result of tighter stock levels, the number
     Q4 2016
                                                                                                              plus per week) end of the market, a record                                                                 of Knight Frank prime London markets
                                                                                                              number of tenancies were agreed in 2017                                                                    reporting positive annual rental value growth in

     17%
                                                                                                              and agents say a new breed of professional                                                                 January 2018 was five compared to one in the
                                                                                                              super-prime landlord has even been created,                                                                same month last year.
     Rise in the number of new prospective                                                                    catering to tenants with demands as exacting
                                                                                                                                                                                                                         They include Hampstead, where rents have
     tenants that registered in Q4 2017                                                                       as those of buyers.
                                                                                                                                                                                                                         risen by 1% over the last year. As well as
     versus Q4 2016 in PCL and POL
                                                                                                              Rental values fell as a result of higher stock                                                             less rental stock, there is also anecdotal
                                                                                                              levels. Indeed, rents fell on a quarterly basis in                                                         evidence that a growing number of landlords

     -0.6%
                                                                                                              prime central London in January 2018 for the                                                               in Hampstead are considering selling as price
                                                                                                              28th consecutive month, setting a record for                                                               growth bottoms out. There are early signs of
     Average annual decline in rental values                                                                  the last two decades.                                                                                      this trend across a number of London markets.
     in PCL between £750 and £1,000 per
                                                                                                              However, as the chart below shows, the                                                                     Other areas reporting positive rental value
     week compared to -4.5% between
                                                                                                              balance of power is starting to tip back in                                                                growth include King’s Cross, where supply is
     £1,000 and £1,500 per week
                                                                                                              favour of landlords as levels of new supply                                                                relatively constrained in a market with growing
                                                                                                              moderate.                                                                                                  demand from students and tenants working in
                                                                                                                                                                                                                         the tech sector.
                                                                                                              Indeed, the number of properties listed for
                                                                                                              rent in prime central London in the final three                                                            Indeed, the importance of students in driving
                                                                                                              months of last year was 19% lower than the                                                                 demand continues to grow. They represented
                                                                                                              same period in 2016 and was the lowest                                                                     16% of all new prospective tenants in the
                                                                                                              quarterly figure since Q1 2015, Rightmove                                                                  year to January 2018, which was higher than
                                                                                                              data shows.                                                                                                a figure of 14% recorded in the preceding
                                                                                                                                                                                                                         12-month period and 11% registered in the
                                                                                                                                                                                                                         year to January 2016.
 FIGURE 1
 Rental value declines moderate How declining stock levels can drive rental value growth                                                                                                                                 Elsewhere, a series of new developments and
                                                                                                                                                                                                                         public realm improvements in Mayfair have
60%
                                                 New Lettings Properties on the Market (annual change, LonRes)                                                   PCL Rental Value Growth                                 drawn tenants to the area, pushing up rental
50%                                                                                                                                                                                                               20%
                                                                                                                                                                                                                         values by 4.8% in the year to January. The
40%                                                                                                                                                                                                               15%    relative weakness of the pound has also made
30%                                                                                                                                                                                                                      Mayfair more affordable to North American
                                                                                                                                                                                                                  10%
20%                                                                                                                                                                                                                      tenants, who are now more prevalent in the area.
10%                                                                                                                                                                                                               5%
                                                                                                                                                                                                                         By price band, annual rental value declines
 0%                                                                                                                                                                                                               0%
                                                                                                                                                                                                                         were less marked below £1,000 per week in
-10%                                                                                                                                                                                                              -5%    PCL, a section of the market where demand
-20%
                                                                                                                                                                                                                  -10%
                                                                                                                                                                                                                         has been stronger. There was an annual decline
-30%                                                                                                                                                                                                                     of -0.6% between £750 and £1,000 per week,
                                                                                                                                                                                                                  -15%   which compared to -4.5% between £1,000 and
-40%
                                                                                                                                                                                                                  -20%   £1,500 per week. Rental value growth between
                                                                                                                                                                                                                         £1,000 and £5,000 has declined to a greater
         Q2-2008

                   Q4-2008

                             Q2-2009

                                       Q4-2009

                                                  Q2-2010

                                                            Q4-2010

                                                                      Q2-2011

                                                                                Q4-2011

                                                                                          Q2-2012

                                                                                                    Q4-2012

                                                                                                              Q2-2013

                                                                                                                        Q4-2013

                                                                                                                                  Q2-2014

                                                                                                                                            Q4-2014

                                                                                                                                                      Q2-2015

                                                                                                                                                                Q4-2015

                                                                                                                                                                          Q2-2016

                                                                                                                                                                                    Q4-2016

                                                                                                                                                                                              Q2-2017

                                                                                                                                                                                                        Q4-2017

                                                                                                                                                                                                                         extent because of weaker demand among the
                                                                                                                                                                                                                         traditional tenant base of senior executives due
 Source: Knight Frank Research / LonRes
                                                                                                                                                                                                                         to economic and political uncertainty.

 5
LONDON RESIDENTIAL REVIEW SPRING 2018

MACROVIEW RISING RATES AND BREXIT
The mood of complacency on global stock                                                                                                                                                                                                                                                                           a direction of travel towards compromise is                                                                                                                                                                                                                                                                                                                                                                                                                                           RESIDENTIAL RESEARCH
markets came to an end in February. The                                                                                                                                                                                                                                                                           becoming more discernible, embodied by                                                                                                                                                                                                                                                                                                                                                                                                                                                Tom Bill
volatility on world markets showed investors                                                                                                                                                                                                                                                                      the UK government’s apparent strategy of                                                                                                                                                                                                                                                                                                                                                                                                                                              Head of London Residential Research
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        +44 20 7861 1492
are now factoring in rate rises in response                                                                                                                                                                                                                                                                       ‘managed divergence’ from EU rules in some                                                                                                                                                                                                                                                                                                                                                                                                                                            tom.bill@knightfrank.com
to inflationary pressures across global                                                                                                                                                                                                                                                                           areas.
economies.
                                                                                                                                                                                                                                                                                                                  The pound was trading 13% higher against the                                                                                                                                                                                                                                                                                                                                                                                                                                          HEAD OF LONDON RESIDENTIAL
In the UK, comparatively strong employment                                                                                                                                                                                                                                                                        dollar at the start of February this year versus a                                                                                                                                                                                                                                                                                                                                                                                                                                    Noel Flint
and wage growth data have bolstered the                                                                                                                                                                                                                                                                           year earlier, which captures the same sense of                                                                                                                                                                                                                                                                                                                                                                                                                                        +44 20 7861 5020
arguments of those who believe rates will                                                                                                                                                                                                                                                                         cautious expectation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 noel.flint@knightfrank.com
rise more than once this year, with some
                                                                                                                                                                                                                                                                                                                  The key question, however, is how these                                                                                                                                                                                                                                                                                                                                                                                                                                               HEAD OF LETTINGS
economists pencilling in an initial rise in May.
                                                                                                                                                                                                                                                                                                                  official negotiations square with the views of                                                                                                                                                                                                                                                                                                                                                                                                                                        Tim Hyatt
The result is that the lending environment for                                                                                                                                                                                                                                                                    a group of Conservative lawmakers pursuing                                                                                                                                                                                                                                                                                                                                                                                                                                            +44 20 7861 5044
residential property will become slightly less                                                                                                                                                                                                                                                                    their own version of Brexit.                                                                                                                                                                                                                                                                                                                                                                                                                                                          tim.hyatt@knightfrank.com
benign, which, for some buyers, could add to
                                                                                                                                                                                                                                                                                                                  From their perspective, the reward would be
affordability pressures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                PRESS OFFICE
                                                                                                                                                                                                                                                                                                                  to obtain a cleaner break from the EU. The risk
However, the same pressures may also bring                                                                                                                                                                                                                                                                        for them is that they topple the government as                                                                                                                                                                                                                                                                                                                                                                                                                                        Harry Turner
about a degree of liquidity in some sections                                                                                                                                                                                                                                                                      well as the Prime Minister and a new Labour                                                                                                                                                                                                                                                                                                                                                                                                                                           +44 20 3861 6974
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        harry.turner@knightfrank.com
of the market over time. In particular, property                                                                                                                                                                                                                                                                  government pursues a softer version of Brexit.
owners whose mortgage repayments become
                                                                                                                                                                                                                                                                                                                  To fully understand the deliberations of
more onerous may decide to sell.
                                                                                                                                                                                                                                                                                                                  this group of Brexit supporters, it is worth
Meanwhile, there has been little sense of                                                                                                                                                                                                                                                                         remembering that they differ on more than
complacency in the political arena in recent                                                                                                                                                                                                                                                                      just their version of Brexit with the opposition
months. The key to anticipating the outcome                                                                                                                                                                                                                                                                       Labour Party. They hold diametrically
of Brexit talks, as well as the likely impact                                                                                                                                                                                                                                                                     opposing views on many issues.
on property markets, is understanding the
                                                                                                                                                                                                                                                                                                                  It is also fair to say that their precise vision for
compatibility of two unrelated processes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Knight Frank Residential Research provides
                                                                                                                                                                                                                                                                                                                  Brexit won’t entirely mirror the views of the                                                                                                                                                                                                                                                                                                                                                                                                                                      strategic advice, consultancy services and
The first is the negotiations between                                                                                                                                                                                                                                                                             52% of the UK population who voted to leave                                                                                                                                                                                                                                                                                                                                                                                                                                        forecasting to a wide range of clients worldwide
Brussels and London, which is focussed                                                                                                                                                                                                                                                                            in June 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      including developers, investors, funding
on the pragmatic matter of the post-Brexit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           organisations, corporate institutions and the
                                                                                                                                                                                                                                                                                                                  It is likely that they will therefore consider                                                                                                                                                                                                                                                                                                                                                                                                                                     public sector. All our clients recognise the need
relationship between the UK and the EU.
                                                                                                                                                                                                                                                                                                                  carefully whether they have more to lose or                                                                                                                                                                                                                                                                                                                                                                                                                                        for expert independent advice customised to
While the realpolitik is not always obvious,                                                                                                                                                                                                                                                                      gain by moving against the Prime Minister.                                                                                                                                                                                                                                                                                                                                                                                                                                         their specific needs.

                                                                                         RESIDENTIAL RESEARCH                                                                                                                                                                                                      RESIDENTIAL RESEARCH
 RESIDENTIAL RESEARCH
                                                                                         PRIME CENTRAL                                                                                                                                                                                                             PRIME CENTRAL
                                                                                         LONDON SALES INDEX                                                                                                                                                                                                        LONDON RENTAL INDEX

                                                                                         The prime central London sales index is based on
                                                                                                                                                       AREAS OF PRIME CENTRAL LONDON                                                                                                                               This report analyses the performance of single-unit
                                                                                                                                                                                                                                                                                                                   rental properties in the second-hand prime central                                 TOTAL RETURNS IN PRIME

 LONDON
                                                                                                                                                                                                                                                                                                                                                                                                      CENTRAL LONDON SET TO RISE
                                                                                         repeat valuations of second-hand stock and does

                                                                                                                                                       RETURN TO POSITIVE GROWTH
                                                                                                                                                                                                                                                                                                                   London market between £250 and £5,000-plus per
                                                                                         not include new-build property, although units from                                                                                                                                                                       week. For an analysis of the build-to-rent market
                                                                                         completed developments are included over time.                                                                                                                                                                            and the institutional private rented sector in London
                                                                                                                                                                                                                                                                                                                   and the rest of the UK, please see our Private
                                                                                                                                                       Average prices were 0.7% down in the year to December after bottoming                                                                                       Rented Sector Update report                                                        A combination of rising rents and capital values means total returns will

 RESIDENTIAL
                                                                                                                                                       out at the start of 2017, says Tom Bill                                                                                                                     http://www.knightfrank.co.uk/research                                              improve, says Tom Bill

                                                                                                                                                                                                                                                                                                                   December 2017
                                                                                                                                                                                                                                                                                                                                                                                                      Average rents in prime central London fell 2.2%                                                  14% over the same period while there were                       LONDON SUPER-PRIME LETTINGS INSIGHT                                                                                                                                          SPRING                          2018
                                                                                         December 2017                                                The prime central London sales market                                             response in asking price adjustments and a more                                                                                                               year-on-year in December, which was the most                                                     17% more new prospective tenants registering.

 REVIEW
                                                                                                                                                      continued its move towards recovery mode in                                       rapid recovery this year.                                                  An average gross yield of 3.2% in prime                                            modest decline recorded in 21 months. Average
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       From an investor perspective, in a world of low
                                                                                         Sales volumes increased 5% in the six                        December.                                                                                                                                                    central London compared to a 10-year UK                                            rental values for existing homes have been falling
                                                                                                                                                                                                                                        While pricing of £1m - £2m homes seemed more                                                                                                                  year-on-year for more than two years due to
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       returns, the prime central London lettings market               Price sensitivity in the sales market meant there was a record number of super-
                                                                                         months to November                                                                                                                                                                                                        government bond yield of 1.2%                                                                                                                                                       became a comparatively more attractive asset                    prime tenancies in 2017. However, an anticipated recovery in sale prices means
                                                                                                                                                      While average prices fell 0.7% on an annual                                       resilient in late 2016, there is evidence that prices                                                                                                         rising supply but the pattern is now reversing.
                                                                                                                                                      basis, this was the most modest rate of decline                                                                                                                                                                                                                                                                                                  class in 2017.                                                  there are more ‘try-before-you-buy’ tenants, as Tom Smith tells Tom Bill
                                                                                                                                                                                                                                        have instead been adjusting this year.
  AUTUMN 2017                                                                            Average prices fell 0.7% in the year to                      recorded since June 2016. The broadly flat result                                                                                                                                                                                               A large spike in new lettings properties in
                                                                                                                                                                                                                                                                                                                   Average rents in prime central London fell                                                                                                                                          Although extra taxes have given landlords
                                                                                         December                                                     provides further evidence that the price declines                                 Asking price data underlines this trend, showing                                                                                                              the middle of last year, which followed the                                                                                                                      There was a record number of super-prime                                                     compared to 11 in 2016. “There is increasingly
                                                                                                                                                                                                                                                                                                                   2.2% year-on-year in December                                                                                                                                                       pause for thought in recent years, this has come
                                                                                                                                                      of up to 7% recorded in the middle of last year                                                                                                                                                                                                 introduction of the additional rate of stamp duty                                                                                                                tenancies agreed in London in 2017 as price-                                                 the opportunity to rent the sort of high-quality
                                                                                                                                                                                                                                        that reductions in asking prices have been more                                                                                                                                                                                                                against the backdrop of rental values that are
                                                                                                                                                      are bottoming out.                                                                                                                                                                                                                              in April 2016, was one of the factors behind                                                                                                                     sensitivity in the sales market continued to boost                                           stock that has come from the sales market that
                                                                                         Between £5 million and £10 million                                                                                                             prevalent below £2 million in 2017. Some 40%                                                                                                                                                                                                                   bottoming out.
                                                                                                                                                                                                                                                                                                                   The number of new lettings properties                                              the increase. The other key reason has been                                                                                                                      demand.                                                                                      historically did not exist on the lettings market,”
                                                                                         average prices rose 1.9% in the year to                      Indeed, an analysis of pricing on a more local                                    of sub-£2 million properties in prime central                              coming onto the market recorded a like-                                            a growing number of so-called ‘accidental                                                        The current average gross yield in prime central                                                                                                             said Tom. “The clear message for landlords is                      Prince Albert Road, let, guide price £12,000 p/w
                                                                                         December                                                     basis across prime central London shows that                                      London underwent an asking price reduction in                              for-like fall of 1.2% between January and                                          landlords’, a group of would-be vendors who                                                      London is 3.2%.                                                 Some 137 properties were rented out at £5,000-
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    that super-prime tenants will not compromise on
                                                                                                                                                      the number of areas that recorded a rise in                                                                                                                  November versus 2016                                                               are waiting for more pricing certainty before                                                                                                                    plus per week last year, which represented a
                                                                                                                                                                                                                                        the year to November 2017, according to data                                                                                                                                                                                                                   This is higher than the risk-free rate of a 10-year                                                                                                          quality in the same way as buyers will not.”
                                                                                                                                                      prices during the month continued to grow in                                                                                                                                                                                                    they return to the sales market.                                                                                                                                 34% increase on the figure of 102 in 2016. In the

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Important Notice
                                                                                         40% of sub-£2 million properties                                                                                                               from Rightmove. This compares to some 29%                                                                                                                                                                                                                      UK government bond, which was yielding                          three-month period between July and September
                                                                                                                                                      December, as figure 2 shows. The number was                                                                                                                                                                                                                                                                                                                                                                                                                                                                   The prime central London sales market is now
                                                                                         underwent a price reduction in the                                                                                                             of £5 million-plus properties undergoing a price                           There was a 19% rise in viewings between                                           As figure 2 shows, the rate of new lettings                                                      approximately 1.2% in mid-December. Indeed                      there were 49 transactions, which is a record for a
                                                                                                                                                      at its highest monthly level since May 2016.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  moving towards recovery mode as higher
                                                                                         year to November, versus 29%                                                                                                                   reduction over the same period.                                            January and November 2017 versus 2016                                              properties coming onto the market has slowed.                                                    the spread between the two is high by historic                  single quarter in 12 years of LonRes data.                                                   transaction costs are absorbed. Average prices
                                                                                         above £5 million                                             However, there is still no consistent pattern                                                                                                                                                                                                   Indeed, November was the first month in 2017                                                     standards, as figure 1 shows.                                                                                                                                above £10 million rose 0.2% in the year to
                                                                                                                                                                                                                                        Activity also continued to rise modestly in                                                                                                                                                                                                                                                                                    “The momentum of recent years is still gathering
                                                                                                                                                      across different price bands.                                                                                                                                                                                                                   that recorded a year-to-date decline in the                                                                                                                                                                                                                   January 2018, the first annual increase in almost
                                                                                                                                                                                                                                                                                                                   The number of tenancies agreed rose 14%                                                                                                                                             This trend looks set to continue which,                         pace,” said Tom Smith, Knight Frank’s head of
                                                                                                                                                                                                                                        December. There was a 5% like-for-like increase                                                                                                               number of new lettings properties placed on the
                                                                                         Macroview: The political backdrop                            For example, average prices rose 1.9% in the                                                                                                                 in the first eleven months of 2017                                                                                                                                                  combined with bottoming out sales values, will                  super-prime lettings. “Demand is resilient due to                                            two years.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     © Knight Frank LLP 2018 – This report is
                                                                                                                                                                                                                                        in sales volumes in the six months to November                                                                                                                market, with a fall of 1.2%.                                                                                                                                                                                                                                                                                                     Kensington Park Gardens, let, guide price £15,950 p/w
                                                                                                                                                      year to December for homes valued at between                                                                                                                                                                                                                                                                                                     boost total returns. Despite the fact that UK                   higher rates of stamp duty and the associated                                                In a sign that more tenants are anticipating this
                                                                                                                                                      £5 million and £10 million, compared to a fall of                                 2017, LonRes data shows. While we don’t                                                                                                                       Demand remained stronger than last year,                                                         inflation rose to 3.1% in December, there is                    uncertainty over the short-term prospects for
                                                                                                                                                                                                                                                                                                                   Macroview: The political backdrop                                                                                                                                                                                                                                                                                                                recovery, there has been an increase in the
                                                                                                                                                      1.2% for properties priced at between £1 million                                  expect sales volumes to improve in a meaningful                                                                                                               which will also underpin rental value growth.                                                    no immediate likelihood of a rate rise. Indeed,                 price growth in the sales market. A lack of clarity                                          number who have requested a clause in the
                                                                                                                                                      and £2 million.                                                                   way until the market adjusts fully to higher                                                                                                                  There was a 19% rise in viewings between                                                         subject to the usual caveats, the Bank of                       regarding Brexit has also been a factor.”                                                    tenancy agreement giving them first refusal to                     Super-Prime Lettings Team
                                                                                                                                                                                                                                        transaction costs, we explore how the current                                                                                                                 January and November 2017 compared to                                                            England expects the base rate to be 1% in 2020,                 As well as more transactions, the deals agreed                                               buy at the end of the tenancy.                                     The Knight Frank Super-Prime Lettings team
                                                                                                                                                      Higher rates of stamp duty had a more
                                                                                                                                                                                                                                                                                                                                                                                                      2016. The number of tenancies agreed rose                                                        which is still ultra-low by historical standards.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     published for general information only and
                                                                                                                                                      immediate and marked impact at the higher level                                   political backdrop may influence behaviour in the                                                                                                                                                                                                                                                                              are now on a longer-term basis as renting                                                    “This option was rarely mentioned a few years
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       provides a bespoke service to clients with property

                                                                                                                                                      of the market last year - which led to a quicker                                  Macroview section on page 2.                                                                                                                                                                                                                                                                                                   becomes more accepted as a tenure model in                                                                                                                      interests of £5,000-plus per week in prime central
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       FIGURE 2
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    ago but is now a frequent topic of conversation
                                                                                                                                                                                                                                                                                                                                                                                                      FIGURE 1                                                                                                                                                         the super-prime market, said Tom. The average                                                                                                                   London. Led by Tom Smith, the team consists of
                                                                                                                                                                                                                                                                                                                                                                                                      PCL returns look more attractive                                                                 New demand outpaces new supply                                                                                                                               on viewings. Many landlords have nothing to
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       length of a tenancy in 2017 was 589 days, which                                                                                                                 12 local specialists with over 130 years of collective
                                                                                                                                                                                                                                                                                                                                                                                                      Spread between average gross PCL yield                                                           Calendar year-to-date 2017 versus 2016                                                                                                                       lose with this ‘try-before-you-buy’ route,” says
                                                                                                                                                       FIGURE 1                                                                         FIGURE 2                                                                                                                                                                                                                                                                                                                       compared to 548 in 2016 and 528 in 2015, an                                                                                                                     experience and has a dominant market share in
                                                                                                                                                                                                                                                                                                                                                                                                      and 10-year UK government bond yield                                                                                                                                                                                                                          Tom. “The worst case scenario is that you have
                                                                                                                                                       Higher value property prices outperform                                          More markets return to positive growth                                                                                                                                                                                                                            New properties on the market                                 analysis of Knight Frank data shows.                                                                                                                            London. It completed twice as many super-prime
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    an income stream that covers your costs and

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     not to be relied upon in any way. Although
                                                                                                                                                       Annual growth by price band in the second half of 2017                           Markets reporting price growth vs price declines                                                                                                                   PCL yield    UK 10yr govt bond yield                                                           New prospective tenants                                                                                                                                                                                                      lettings deals in London as its nearest competitor
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Tenancies agreed                                             There was also a record number of £15,000-                                                   the best is that you also have a sale at the other
                                                                                                                                                                                                                                                                                                                                                                                                           PCL vs UK 10yr bond spread (right axis)                                                                                                                                                                                                                                                                                     in 2017, LonRes data shows. The team members
                                                                                                                                                            Sub £1m                        £1m to £2m                   £2m to £5m                                                                                                                                                                                                                                                                        Applicant viewings                                           plus per week deals last year, with 20 recorded                                              end.”
                                                                                                             TOM BILL                                       £5m to £10m                    £10m-plus                                                                                                                                    TOM BILL                                                    8%                                                                                         2.5%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       30%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       are based in Belgravia, Belsize Park, Chelsea,
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Hampstead, Hyde Park, Kensington, Knightsbridge,
                                                                                                             Head of London                             2%                                                                              100%                                                                                            Head of London                                                                                                                                         2.0%                                                                    FIGURE 1
                                                                                                                                                                                                                                                                                                                                                                                                    7%                                                                                                                                                                                                                                                                                                                                 Marylebone, Mayfair, Notting Hill, South Kensington
                                                                                                             Residential Research                                                                                                                                                                    Areas                              Residential Research                                                                                                                                           25%
                                                                                                                                                        1%
                                                                                                                                                                                                                                         80%
                                                                                                                                                                                                                                                                                                     reporting
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               1.5%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       London super-prime lettings volumes and rental values
                                                                                                                                                                                                                                         60%                                                         positive                                                                                       6%                                                                                                                                                                                                                                                                                                                                 and St John’s Wood. Knight Frank’s global real
                                                                                                                                                        0%                                                                                                                                           growth                                                                                                                                                                                            20%

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     high standards have been used in the
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       estate network gives the team access to London’s
                                                                                                                                                                                                                                         40%
                                                                                                                                                                                                                                                                                                                      “In a world of low returns,                                                                                                                                              1.0%                                                                      Total Transactions              Average weekly rent                       Maximum weekly rent
                                                                                           “The broadly flat result provides                           -1%
                                                                                                                                                                                                                                         20%
                                                                                                                                                                                                                                                                                                                                                                                                    5%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       most exclusive properties on and off the market.
                                                                                                                                                                                                                                                                                                                      the prime central London                                                                                                                                                 0.5%    15%                                                             50
                                                                                           further evidence that the                                   -2%                                                                                                                                                                                                                                                                                                                                                                                                                                                     £45,000                                  £45,000
                                                                                                                                                                                                                                          0%                                                                                                                                                        4%
                                                                                                                                                                                                                                                                                                                      lettings market became a                                                                                                                                                 0.0%    10%                                                             40                                                       £30,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            £35,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           £29,000 £25,000 £30,000
                                                                                           falls of up to 7% recorded
                                                                                                                                                       -3%                                                                              -20%
                                                                                                                                                                                                                                                                                                                      comparatively more attractive                                                                                                                                                                                                                         £16,800 £15,000£18,500
                                                                                                                                                                                                                                                                           SDLT reform                                                                                                              3%                                                                                                                                                                                                                                                                         £20,000
                                                                                                                                                       -4%                                                                              -40%                                                                                                                                                                                                                                                                                                                                                                                                                        £13,500
                                                                                           in the middle of last year are
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               -0.5%    5%                                                             30

                                                                                           bottoming out.”
                                                                                                                                                       -5%                                                                              -60%                                                Areas
                                                                                                                                                                                                                                                                                         reporting                    asset class in 2017.”                                                         2%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               -1.0%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       20                                                                                                                                                    £10,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Tom Smith
                                                                                                                                                                                                                                        -80%                                              negative                                                                                                                                                                                                      0%                                                                                                                                                                                                                                                       Head of Super-Prime

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     preparation of the information, analysis, views
                                                                                                                                                       -6%
                                                                                                                                                                                                                                        -100%
                                                                                                                                                                                                                                                                                           growth
                                                                                                                                                                                                                                                                                                                      Follow Tom at @TomBill_KF                                                     1%                                                                                         -1.5%
                                                                                           Follow Tom at @TomBill_KF                                   -7%                                                                                                                                                                                                                                                                                                                                                                                                             10                                                                                                                                                    £8,000                              Lettings
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        -5%
                                                                                                                                                                                                                                                  2010

                                                                                                                                                                                                                                                           2011

                                                                                                                                                                                                                                                                    2012

                                                                                                                                                                                                                                                                           2013

                                                                                                                                                                                                                                                                                  2014

                                                                                                                                                                                                                                                                                         2015

                                                                                                                                                                                                                                                                                                 2016

                                                                                                                                                                                                                                                                                                           2017

                                                                                                                                                                                                                                                                                                                                                                                                    0%                                                                                         -2.0%                                                                                                                                                                                                                                                             tom.smith@knightfrank.com
                                                                                                                                                                   Jul-17

                                                                                                                                                                                  Aug-17

                                                                                                                                                                                              Sep-17

                                                                                                                                                                                                             Oct-17

                                                                                                                                                                                                                      Nov-17

                                                                                                                                                                                                                               Dec-17

                                                                                           For the latest news, views and analysis                                                                                                                                                                                                                                                                                                                                                                                                                                      0                                                                                                                                                    £6,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Jul-17

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Aug-17

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Sep-17

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Oct-17

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Nov-17

                                                                                                                                                                                                                                                                                                                       For the latest news, views and analysis                                                                                                                                                                                                                                                                                                                                                                                                   +44 20 7881 7730
                                                                                                                                                                                                                                                                                                                                                                                                           1994
                                                                                                                                                                                                                                                                                                                                                                                                                  1996
                                                                                                                                                                                                                                                                                                                                                                                                                         1998
                                                                                                                                                                                                                                                                                                                                                                                                                                2000
                                                                                                                                                                                                                                                                                                                                                                                                                                       2002
                                                                                                                                                                                                                                                                                                                                                                                                                                              2004
                                                                                                                                                                                                                                                                                                                                                                                                                                                     2006
                                                                                                                                                                                                                                                                                                                                                                                                                                                            2008
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   2010
                                                                                                                                                                                                                                                                                                                                                                                                                                                                          2012
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 2014
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        2016

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Q1-2015

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Q2-2015

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Q3-2015

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Q4-2015

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Q1-2016

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Q2-2016

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Q3-2016

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Q4-2016

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                Q1-2017

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Q2-2017

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Q3-2017

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Q4-2017

                                                                                           on the world of prime property, visit
                                                                                                                                                                                                                                                                                                                       on the world of prime property, visit
                                                                                           Global Briefing or @kfglobalbrief                          Source: Knight Frank Research                                                     Source: Knight Frank Research / LonRes
                                                                                                                                                                                                                                                                                                                       Global Briefing or @kfglobalbrief                                              Source: Knight Frank Research                                                                    Source: Knight Frank Research
  THE DEMAND RECOVERY   THE THREE-TIER LETTINGS MARKET   BREXIT AND FINANCIAL SERVICES

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     and projections presented in this report, no
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Source: Knight Frank Research / LonRes

London Review Autumn 2017                                                                   Prime Central London                                                                                                                                                                                                     Prime Central London                                                                                                                                                                                                                                                        Super-Prime Lettings
                                                                                         Sales Index December 2017                                                                                                                                                                                                Rentals Index December 2017                                                                                                                                                                                                                                                       Spring 2018                                                                                                                                                                                      responsibility or liability whatsoever can be
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     accepted by Knight Frank LLP for any loss or
RESIDENTIAL RESEARCH
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     damage resultant from any use of, reliance on
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     or reference to the contents of this document.
 LONDON                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              As a general report, this material does not
 DEVELOPMENT
 HOTSPOTS                                                                                       KENSINGTON SALES MARKET INSIGHT 2018                                                                                                                                                                                    HYDE PARK AND BAYSWATER SALES MARKET INSIGHT 2018                                                                                                                                                                                                QUEEN’S PARK MARKET INSIGHT 2018                                                                                                                                                                                            necessarily represent the view of Knight Frank
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     LLP in relation to particular properties or
 RESIDENTIAL DEVELOPMENT                                                                        FIGURE 1                                                                                                                                                                                                                FIGURE 1                                                                                                                                                                                                                                         FIGURE 1

 OPPORTUNITY AREAS 2018                                                                         Property prices in Kensington
                                                                                                Achieved price, year to December 2017
                                                                                                                                                                                                                                                                                                                        Property prices in Hyde Park and Bayswater
                                                                                                                                                                                                                                                                                                                        Achieved price, year to December 2017
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Property prices in Queen’s Park
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Achieved price, year to December 2017

                                                                                                 l Up to £1m

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     projects. Reproduction of this report in whole
                                                                                                                                                                                                                                                FIGURE 2                                                                                                                                                                                                                                                  FIGURE 2                                                                                                                                                                                                                       FIGURE 2
                                                                                                 l £1m to £2.5m                                                                                                                                 Kensington fact sheet                                                                                                                                                                                                                                     Hyde Park and Bayswater fact sheet                                                                                                                                                                                             Queen’s Park fact sheet
                                                                                                 l £2.5m to £5m
                                                                                                 l £5m to £10m                                                                                                                                  Population: 32,098                                                                                                                                                                                                                                        Population: 27,741                                                                                                                                                                                                             Population: 153,991
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             Neasden
                                                                                                 l £10m+
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Dollis Hill
                                                                                                                                                                                                                                                AVERAGE £PSF                                                                                                                                                                                                                                             AVERAGE £PSF                                                                                                                                                                                                                    AVERAGE £PSF
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Willesden Green

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     or in part is not allowed without prior written
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Year to December 2017                 £840
                                                                                                                                                                                            Kens

                                                                                                                                                                                                                                                Year to December 2017                £1,585                                                                                                                                                                                                              Year to December 2017                 £1,250                                                                                                                                                          West Hampstead
                                                                                                                                                                                                                                                Year to December 2016                £1,655                                                                                                                                                                 Ed                                           Year to December 2016                 £1,270                                                                                                                                          Kilburn                                   Year to December 2016                £835
                                                                                                                                                                                                                                                                                                                                                                                                      Paddington Basin
                                                                                                                                                                                              ingto

                                                                                                                                                                                                          Kensington                            Year to December 2015                £1,710
                                                                                                                                                                                                                                                                                                                                                                                                                                                              gw
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Year to December 2015                 £1,270                                                                                                                                                                                    Year to December 2015                £815
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   are
                                                                                                                                                                                                          Palace
                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Ro                                                                                                                                                                                                                               Brondesbury
                                                                                                                                                                                                n Pala

                                                                                                                                                                                                                                                                                                                                                      Porchester
                                                                                                                                                                    Cam

                                                                                                                                                                                                                                                MAXIMUM £PSF                                                                                                                                                                                                               ad                            MAXIMUM £PSF                                                                                                                                                                                                                    MAXIMUM £PSF
                                                                                                                                                                                                                       Hyde Park                                                                                                                      Square
                                                                                                                Holl

                                                                                                                                                                                                                                                                                                                                                                                         Paddington                                                                                                                                                                                                                                                                                                                                      Year to December 2017                      £1,315
                                                                                                                                                                                                                                                Year to December 2017                                £5,200                                                                                                                                                                                              Year to December 2017                             £3,080
                                                                                                                                                                        pde

                                                                                                                                     Holland Park
                                                                                                                                                                                                   ce Gard
                                                                                                                 and

                                                                                                                                                                                                                                                Year to December 2016                                    £6,545                                                                                                                                                                                          Year to December 2016                            £2,940                                                                                                                          Brondesbury Park                               Year to December 2016                      £1,280
                                                                                                                                                                            n Hill

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Year to December 2015                          £1,400
                                                                                                                   Villa

                                                                                                                                                                                                                                                                                                                                            Queensw

                                                                                                                                                                                                                                                Year to December 2015                                 £5,790                                                                                                                                                                                             Year to December 2015                          £2,560                                                                                                                                            Kilburn
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Sal

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Do
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             ue

                                                                                                                                                                                                                                                                                                                                                                                                                                 Gloucester
                                                                                                                                                                                                                                                                                                                                                             Leinste

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     approval of Knight Frank LLP to the form
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          yle                                                                             High Road
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           en

                                                                                                                                                                                                                                                                                                                                                                                                                                                      Connaught
                                                                                                                                                                                  Ro

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               usb

                                                                                                                                                                                                                                                                                                                                                                                                                                 Square
                                                                                                                                                                                                         ens

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Source: Knight Frank Research / LonRes
                                                                                                                                                                                                                                                                                                                                                                                            Gl
                                                                                                                       s Roa

                                                                                                                                                                                                                                                Source: Knight Frank Research / LonRes                                                                                                                                                                                                                   Source: Knight Frank Research / LonRes                                                                                 Ga
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Av

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 Kin nue

                                                                                                                                                                                                                                                                                                                                                                                                                                                      Square
                                                                                                                                                                                                                                                                                                                                                                                             ou
                                                                                                                                                                                   ad

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  rde                           m
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  Ave

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  ury
                                                                                                                                                                                                                                                                                                                                                                  Porche

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      e
                                                                                                                                                                                                                                                                                                                                                                                               ce

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             College

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Th

                                                                                                                                                                                        eet                                                                                                                                                                                                                                                                                                                                                                                                                                            ns
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    gsw

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            tha
                                                                                                                                                                                                                                                                                                                                                                    r Garden
                                                                                                                                                                                                                                                                                                                                               ay

                                                                                                                                                                                                                                                                                                                                                                                                  ste

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Kilburn Park
                                                                                                                                                                               h Str
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Roa

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          en ue                                                                          BLUE PLAQUES
                                                                                                                           d

                                                                                                                                                                                                                                                                                                                                                                                                    r Te

                                                                                                                                                                                                                                                BLUE PLAQUES                                                                                                                                                                                                                                             BLUE PLAQUES                                                                                                                                   Wr en
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        ood

                                                                                                                                                                            Hig
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          d

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Av
                                                                                                                                                                                                                                                                                                                                                                         ster

                                                                                                                                                                                                                                                                                                                                                                                                        rra

                                                                                                                                                                    on                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           Kensal Rise
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Queen’s Park
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                road

                                                                                                                                                               ngt                                                                              John Stuart Mill, philosopher
                                                                                                                                                                                                                                                                                                                                                                                                           ce

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Willesden Junction                                                                                                                               Amy Johnson Aviator
                                                                                                                                                                                                                                                                                                                                                                             s

                                                                                                                                                            nsi                                                                                                                                                                                                                                                                                                                                          Lord Randolph Churchill, politician
                                                                                                                                                                                                                                                                                                                                                                              Terrac

                                                                                                                                                        Ke                                      as                                              William Thackeray, novelist                                                                                                                                       Lancaster Gate                                                                                                                                                                                                                                                                                                         Viscount Northcliffe Newspaper Proprietor
                                                                                                                                                                                            Vill                                                                                                                                                                                                                                                                                                         Sir James Barrie, novelist
                                                                                                                                                                                       on                                                       Rudolf Nureyev, ballet dancer
                                                                                                                                                                                                                                                                                                                                                                                     e

                                                                                                                                                                                  ngd                                                                                                                                                                                                                                                                        Hyde Park                                   Sir Giles Gilbert Scott, architect                                                                                                             Kensal Green
                                                                                                                                                                            Abi                                                                 Jean Sibelius, composer

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     and content within which it appears. Knight
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Lady Violet Bonham-Carter, politician
                                                                                                                                                                                                                                                T.S. Elliot, poet                                                                                                                                                                                                                                                                                                                                                                                                                                                                        STOCK BY PROPERTY TYPE
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Hertha Ayrton, physicist
                                                                                                                                                                                                                                                Sir Winston Churchill, politician                                         l Up to £750,000
                                                                                                                                                                                                                                                Agatha Christie, writer                                                   l £750,000 to £1,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Flat                               71%
                                                                                                                                                                                                                                                                                                                          l £1,000,000 to £2,500,000                                                                                                                                                                                                                        l Up to £500,000
                                                                                                                                                                                                                                                                                                                          l £2,500,000 to £5,000,000                                                                                                                                                                                                                        l £500,000 to £750,000
                                                                                                                                                                                                                                                STOCK BY PROPERTY TYPE                                                                                                                                                                                                                                    STOCK BY PROPERTY TYPE
                                                                                                                                                                                                                                                                                                                          l £5,000,000-plus                                                                   Source: Knight Frank Research / LonRes / Land Registry                                                                                                                                                                                                                                                                           Terraced            21%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            l £750,000 to £1,000,000

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Frank LLP is a limited liability partnership
                                                                                                   Source: Knight Frank Research / LonRes / Land Registry                                                                                                    Flat                                       76%                                                                                                                                                                                                                                                                 l £1,000,000 to £2,000,000
                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Flat                                                                      90%
                                                                                                                                                                                                                                                                                                                        Prime central London update                                                     John White, Hyde Park Office Head                                                                                                                                   l £2,000,000-plus                                                                            Source: Knight Frank Research / LonRes / Land Registry
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Semi-detached       6%
                                                                                                                                                                                                                                                         Terraced             21%                                       Asking price reductions continue to stimulate                                   “Market activity has picked up as the political
                                                                                                Prime central London update                                       Sami Robertson, Kensington Office Head                          Semi-detached      2%                                                                 demand in prime central London, producing                                       and economic backdrop has become                                 Terraced        10%                                                                                                                                                                                                                                                               2%
                                                                                                Activity in the prime central London sales                        “More vendors have adjusted their asking                                                                                                              5% growth in sales volumes in the second                                        comparatively calmer following the snap                                                                                                                          Prime Outer London Update                                                     Laura Dam Villena, Queen’s Park Office Head                                            Detached

                                                                                                market continues to stabilize, a trend                            price to the point that their properties are                         Detached     1%
                                                                                                                                                                                                                                                                                                                        half of 2017 versus 2016, LonRes data                                           general election last June. While issues like                                                                                                                    Prices in prime outer London fell 2.2%                                        “Prices in Queen’s Park and Kensal Rise rose on
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         in the year to January as the market                                          an annual basis until the middle of 2017. By the end

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     registered in England with registered number
                                                                                                that is more marked in higher-value                               gaining growing interest from buyers who                        AGE OF HOUSING STOCK                                                                  shows. This trend has been more marked                                          Brexit remain, a more significant impact on                AGE OF HOUSING STOCK                                                                                                                                                                                                                                                  AGE OF HOUSING STOCK
                                                                                                price brackets. While the overall number                          are heavily scrutinising the market for value.                                                                                                        in higher price brackets and there were 10                                      the market has been the fact that vendors are                                                                                                                    continued to adjust to higher rates                                           of the year, they had declined 8.7% as stamp duty
                                                                                                of transactions rose 5% in the last six                           Kensington has also benefited from some                              Pre-1900                                68%                                      deals above £5 million in the W2 area in the                                    taking a more pragmatic approach to setting                      Pre-1900                      44%                                                               of stamp duty. However, leading                                               related price adjustments
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Contains OS data ©rippled  outwards
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Crown Copyright         from
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         and database right 2017               Pre-1900                        52%

                                                                                                months of 2017 compared to 2016, the                              high-quality new-build schemes, which have                                                                                                            second half of 2017 compared to 6 in 2016.                                      asking prices. As long as there is supporting                                                                                                                    indicators of demand suggest that                                             prime central London. However, with a 52% increase
                                                                                                                                                                                                                                                       9%                                                                                                                                                                                                                                 12%                                                                                                                                                                                                                                                1900-1939            19%
                                                                                                increase was 14% for properties valued                            helped reposition the area as more current
                                                                                                                                                                                                                                      1900-1939
                                                                                                                                                                                                                                                                                                                        It is also noteworthy that the maximum                                          evidence, buyers are prepared to put in offers
                                                                                                                                                                                                                                                                                                                                                                                                                                                                       1900-1939                                                                                         recent declines may start to bottom                                           in buyers registering and an 81% increase in viewings
                                                                                                at between £5 million and £10 million,                            in the minds of buyers. However, education                                                                                                            £PSF in the area rose in 2017 (figure 2). It                                    close to the asking price. However, it is still                                                                                                                  out. Knight Frank data shows there                                            last year compared to 2016, there is still strong                                     1945-1972        9%
                                                                                                                                                                                                                                      1945-1972        7%                                                                                                                                                                                                              1945-1972               24%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         was a 6% rise in the number of new                                            demand for appropriately-priced high-quality homes.

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     OC305934. Our registered office is 55 Baker
                                                                                                                                                                            Contains OS data © Crown Copyright and database right 2017
                                                                                                LonRes data shows. In Kensington, this                            still plays a key role. One house near a very                                                                                                         underlines how prepared buyers remain to                                        too soon to  say the
                                                                                                                                                                                                                                                                                                                                                                                                                   Contains OSmarket  has reached
                                                                                                                                                                                                                                                                                                                                                                                                                               data © Crown Copyright a
                                                                                                                                                                                                                                                                                                                                                                                                                                                      and database right 2017

                                                                                                trend is highlighted by the more resilient                        good school exchanged on the day of the                             1973-1999        9%                                                               purchase best-in-class stock, particularly                                      turning point. Sales volumes will only increase                1973-1999         9%                                                                              prospective buyers in 2017 compared                                           Recent competitive bidding suggests that the decline                                  1973-1999         11%

                                                                                                sales volumes in the typically higher-value                       general election in 2017. The buyer did not                                                                                                           in the area of north of Hyde Park, which                                        more notably once transaction costs have                                                                                                                         to 2016. Meanwhile, viewings rose                                             may be set to reverse and we are still seeing a steady
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           2000-present         9%
                                                                                                                                                                                                                                    2000-present       7%                                                                                                                                                                                                            2000-present         11%                                                                            17% and the number of exchanges                                               flow of buyers from prime central London areas
                                                                                                postcodes to the north of Kensington High                         want to wait for the result, the school was                                                                                                           remains comparatively good value versus                                         been absorbed in a more widespread way                                                                                                                                                                                                                                                                                             Source: Knight Frank Research / Valuation Office Agency
                                                                                                Street, as figure 4 shows.                                        more important.”
                                                                                                                                                                                                                                    Source: Knight Frank Research / Valuation Office Agency
                                                                                                                                                                                                                                                                                                                        other sides of the park.                                                        across the market.”
                                                                                                                                                                                                                                                                                                                                                                                                                                                                      Source: Knight Frank Research / Valuation Office Agency                                            rose 11% year-on-year.                                                        including Notting Hill and St John’s Wood.”
 AREAS TO WATCH           PRICE FORECASTS                   MARKET UPDATE

               London Hotspots                                                                                            Kensington                                                                                                                                                                                                           Hyde Park                                                                                                                                                                                                                                                Queen’s Park                                                                                                                                                                                 Street, London, W1U 8AN, where you may
                                                                                                                       market insight 2018                                                                                                                                                                                                 market insight 2018                                                                                                                                                                                                                                        market insight 2018                                                                                                                                                                            look at a list of members’ names.

6
You can also read
NEXT SLIDES ... Cancel