Savills Middle East: Regional investment into London’s prime residential property market on the rise as the pandemic’s impact eases

Savills, the leading global real estate advisor, recently published its latest report on the prime central London (PCL) market’s growth. After the central London market bottomed out in 2014, the easing of lockdown restrictions and subsequent return to the capital resulted in annual house price growth of 1.4% in the third quarter – the second consecutive three-month period of growth.

Stan Ennor-Glynn, Head of International Residential Sales Middle East said said: “As the global pandemic-related lockdown restrictions are gradually lifted, we are seeing a surge in activity in the UK market. The relaxing of lockdown restrictions and office workers returning to the UK capital have resulted in an influx of Middle Eastern investment into London’s prime residential market. As international travel is gradually reintroduced, we anticipate a more pronounced price increase in this market, which has been long overdue. We anticipate prices to end the year around 2% higher in 2021, with annual price growth reaching 8% by the end of 2022.

Prime London locations such as Notting Hill (+4.6%), Bayswater (+3.3%), and Holland Park (+2.6%) have been driving growth in the capital, which has been fueled by high demand for larger homes with gardens. The value of homes with six or more bedrooms has increased by an average of 6.2 percent in the last year, while five-bedroom properties have increased by 5.0 percent. The rising demand for larger residences has resulted in a 2.7 percent increase in prices outside of central London on an annual basis.

Lucian Cook, Head of Residential Research at Savills, added, “Throughout the pandemic, families searching for larger space and outdoor areas have been the driving force in the prime London market. These buyers have been encouraged by the low interest rate environment, which has masked the impact of the stamp duty holiday’s phased withdrawal. However, as we return to normalcy, we are seeing an increase in prices across a broader range of property types. Year-on-year capital value growth for two and three-bedroomed homes in London’s most desirable neighborhoods has now entered the positive territory.”

Commenting on the impact of the return to the office, Cook added, “Much of the growth in the prime central London market is being fueled by the shifting priorities of those who have begun to return to work or are considering it. Meanwhile, we have not yet seen the full force of international demand return to a prime central London market which has historically always been an attractive market for international buyers.”