(MENAFN- TOH PR) Manama, Bahrain – November 2022: The London real estate market is growing and steadily recovering post-pandemic. Leading global real estate services provider, Savills produced a report on London’s super prime residential market that indicates unprecedented levels of activity in the market above £5m. In total, there were 461 super-prime (£5 million-plus) transactions between Q1-Q3 2022 – which is higher than the total number of sales seen in any full year between 2015 and 2020. In Q3 alone there were 160 super-prime transactions, which remains on par with Q2 2022 and is 33% higher than Q3 2021.
London continues to be one of the most popular global cities for capital investment into real estate. Savills advised that international investors are also taking advantage of the weak pound sterling, which has led prime central London prices to appear significantly cheaper in comparison to 2014, especially for dollar-denominated buyers.
After bottoming out in late 2019, prime central London residential values continue to recover. Savills projects an increase in international investment due to the currency situation, which should further help support prices. For US dollar-denominated buyers, Prime Central London (PCL) prices are still more than 47% lower than the market peak of 2014, providing immense opportunity. As a result of a recovering market, new applicant registrations in PCL have increased by 109% in Jan-Sep 2022 vs Jan-Sep 2018/19.
Meanwhile, a strong rental market in PCL is evidence of growing occupier demand. With annual rental movement up 13.7% in the past year.
Steven Morgan, CEO of Savills Middle East said: “Valued at $23.6bn per year, our recent research showed that London is consistently leading the world in cross-border property investment. For example, from October to December 2021, Savills experienced the highest number of properties sold in any three-month period since 2016. Similarly, London leads Europe for annual rental growth for prime rental value and yields in H1 22.”
“Overall, there is a sense of opportunity as super prime buyers take advantage of unique global market conditions combined with a central London market that’s had stagnant growth for several years. For many investors, there’s a stronger desire to put funds into assets they can enjoy, with the pandemic forcing many to rethink what they want, looking for bigger spaces with more green areas and home offices.”
With loan rates rising sharply, economists believe this would exert some pressure on housing price growth. Whilst the prime market is less dependent on mortgage finance than the mainstream, it is not immune to higher costs of debt. Some downward pressure on prices and transactions in domestic markets is still expected, but the extent is dependent on when rates peak and subsequently ease back.
Stan Ennor-Glynn, Head of International Residential Sales Middle East for Savills Middle East, shared his thoughts on the potential in the UK, “London has a rich history as a stable long-term destination with solid growth, making it an ideal investment for wealth preservation. We expect to see the market continue to grow post-pandemic, with many investors securing their properties as more cash buyers from the region look to take advantage of the weak sterling.”
The key reasons on London being an attractive investment proposition include:
● Major global companies are expanding operations in the UK capital.
● Environmental, Social and Governance (ESG) - London is the world-leading city in ESG, which is a high-priority agenda item for investors and occupiers alike. The Mayor has set a target for London to be a carbon-neutral city by 2030, with 65% of London’s municipal waste being recycled. As companies invest into London, so too are developers, who are offering increasingly attractive opportunities.
● International connectivity – London has six international airports that see over 175 million passengers a year with 21.7 million international visitors in 2019 alone.
● World-renowned universities – There are over 140,000 students at higher education institutions in London, with the highest number of universities featuring in the top 50 globally in comparison to other large cities such as New York, Sydney, and Beijing. London also attracts and retains more students than any other UK city, with over half of students who study in London remaining in the capital after graduation.
● Infrastructure – Crossrail is set to serve 200 million passengers a year from 2022. With HS2, Britain’s new high-speed railway, London will be linked to Birmingham, Manchester, and Leeds - easing transportation between the cities.
● Business environment – London is made up of 1.1 million private sector businesses, accounting for over 20% of the UK in total, which is one of the highest-ranking countries in the World Bank’s Ease of Doing Business index.
Savills, together with AHLI United Bank; London law firm, Boodle Hatfield, and developer Lodha presented other key findings from Savills Prime Central London Market Update to Bahraini investors at the Four Seasons Bahrain in Manama on 1st November 2022.
Led by Katy Warrick, Head of London Residential Research for Savills, the event is part of a Savills Prime Residential Market Update roadshow organised by Savills Middle East, to deliver the latest market insights and to showcase the investment opportunities of the central London market to the MENA region.
For more information about Savills and their London developments, please visit:
Global property agents Savills provide an extensive range of residential and commercial services across the United Arab Emirates, Oman, Bahrain, Egypt and Saudi Arabia. Established in the Middle East over 40 years ago, expertise includes everything from financial and investment advice to valuation, planning, and property management. Originally founded in the UK in 1855, Savills has a long-standing history and over 600 owned and associate offices, employing more than 35,000 people in over 60 countries throughout the Americas, Europe, Asia Pacific, Africa, and the Middle East.
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