At Home Abroad
Nick Barnes of Chesterton Humberts on London, the world’s great residential market
I am often asked why London is so popular among the international HNW property buying community. There is no pat answer, but rather it is a unique combination of factors which produces the irresistible cocktail that is London.
We could begin with London’s cosmopolitan nature and its wealth of cultural and leisure experiences; its status as the world’s leading financial centre; the benefits from overlapping with the Asian and North American time zones and language — English, the lingua franca of international business. We could point to the stable environment and society.
However, London is an equally attractive proposition from a real-estate perspective, offering a large stock of high-quality properties and a track record of growth performance and transparency. The legal system is straightforward with clear title assured, while transaction costs are relatively low, and careful planning can reduce the tax burden on both acquisition and disposal of property. The fast-growth emerging economies have given new-money HNWs a luxury lifestyle of which property is a key element — with London high on the ‘must buy’ list. The weakness of sterling over the past few years has further enhanced the attractiveness of London.
The resilience of the prime London locations is amply demonstrated by their performance since the recession. The five central boroughs containing the majority of prime residential stock have all seen prices recover to exceed their pre-recession peak levels, led by Kensington and Chelsea and Westminster.
These property values are likely to be sustained at a high level. The imbalance between supply and demand has become exacerbated, and new development opportunities are limited due to a lack of sites and strict planning control. We forecast average price growth of 5-7 per cent in 2012.