LONDON LUXURY LIVING
Cityscape magazine spoke to Safina Ahmad, head of residential agency at CBRE, about investment & development trends in London’s high-end residential segment.
25 May 2015
How would you say has the central London luxury residential market evolved or transformed over recent years?
In recent years, the boundaries of Central London have definitely evolved in the eyes of high net-worth buyers. For luxury home buyers, the map of Central London was limited to the east of Bond Street or North of Hyde Park. In the meantime the amenities that prime property buyers like to have on their doorstep have become increasingly concentrated where the boundaries of the traditional golden postcodes end. The Tate Modern, Borough Market and the National Theatre, South Bank residents also have the Mondrian Hotel shaping a wonderfully sophisticated cultural and social scene.
There are many hotspots in Soho, Fitzrovia and Mid-Town now, for instance the Ham Yard Hotel and Berners Tavern. The Royal Opera House in Covent Garden is already a key attraction and the retail experience in the area has completely transformed; all of these elements contribute significantly to the buzzy city vibe that interests high-net-worth property buyers.
We have noticed a trend of residents leaving homes in Knightsbridge and Belgravia to move into Soho. Similarly, the empty nesters who had moved out of London are heading back into Covent Garden because they missed being close to the theatre district.
What are the current development trends in London’s West End?
There is much more choice than ever in terms of the types of properties and new developments available to buyers in the West End.
For instance, St James’s House offers the magnificent late classical architecture including its grand entrance, imposing both inside and out. On the other hand, there are the low-key but high-quality developments like 10 Soho Square which offer five wonderfully spacious lateral apartments overlooking that coveted garden square. Built over 3 acres, Fitzroy Place is a whole new community with a significant office and retail element to complement the 235 new apartments.
We have also witnessed a rise of the mixed-use developments and additionally, some office buildings and old warehouses are also being converted into beautiful, boutique apartment buildings.
This mix is incredibly important as it helps to maintain the identity of each of London’s villages and districts. Every development feeds on the personality of the surrounding areas and this is evident in the treatment of the interior stylings; Martin Brudnizki brings the quintessentially British history of Covent Garden to life in The Palladio which sits on the Covent Garden Piazza and the warehouse apartments on Hollen Street serve as an ode to Henry Heath’s Hat Factory.
There are more than 270 nationalities now living in London, so it is important that the market continues to evolve and cater to the cosmopolitan diversity of the city’s residents whilst continuing to raise the global benchmark for quality and design.
What would you say is the biggest challenge residential developers face in central London today?
There is a huge pressure on London’s developers to answer the capital’s housing shortage. At the same time, unlocking potential development sites has become increasingly complicated and in turn expensive. These rising costs are just about palatable for some of the UK’s biggest house builders but there is very little support for those smaller developers who know and respect the fabric of each of London’s neighborhoods.
Prior to the recent election much of the rhetoric around this issue focused on an aggressive agenda of envy-driven taxation with very little in the way of supply-side solutions. Going forward greater support is required for the smaller developers who continue to contribute so much to London. Local authorities need to demonstrate their commitment to addressing the housing shortfall by working and sharing risk with smaller developers who are already integral to the delivery of much needed new homes.
As the city grows and prime central space becomes scarce, what is your outlook for the high-end market in central London for the near future?
We have already witnessed an expansion of the original super-prime and prime territories, illustrated perfectly by CBRE’s £1,000 psf and £2,000 psf heat maps. At the same time we’re seeing new prime epicentres; the draw of a penthouse atop the iconic Battersea Power Station or in the principal tower of the old Port of London Authority building overlooking the River Thames and the Tower of London means the prime market is both expanding and fragmenting.
As well as looking for the little part of London that feels like home to them, high net worth buyers are increasingly seeking out properties that are as unique as they are. It’s a real challenge for developers to make every apartment in one scheme unique.
Additionally, there has been a significant increase in investment from the Middle East to the UK residential marker. According to CBRE research, every year for the next 10 years, Middle East will directly invest $4.6 billion in UK real estate, mainly long-term investments.