PRIME CENTRAL LONDON: AN INTRODUCTION
Where exactly is Prime Central London?
Although Prime Central London (PCL) has no fixed definition, it is loosely defined as a collection of neighbourhoods surrounding Hyde Park from Fitzrovia in the East to Holland Park (West Kensington) in the West. These were popular residential areas long before the City of London, Clerkenwell, Bermondsey etc. became desirable places to live. PCL doesn’t usually include Notting Hill or St John’s Wood or certain prime areas in Zone 2 – such as Hampstead and Highgate.
Notable PCL neighbourhoods include: Belgravia, Fitzrovia, Kensington, Knightsbridge, Mayfair, Marylebone and Pimlico.
What makes central London so desirable?
Of course, there is the appeal of living at the centre of everything London has to offer but that is just one factor.
London offers a combination of fundamentals which major European cities like Paris, Berlin or Madrid can’t match.
The fact the UK is English speaking bolsters London’s perception as a global city and draws in people from all corners of the world. Only New York is truly similar to London in this sense.
PCL has is also seen as a safe haven for investors due to the UK’s robust legal and financial systems. This is one reason why PCL recovered so quickly from the 2007 financial crisis and quickly reached new highs. Financial markets also benefit from Greenwich Mean Time, allowing The City of London to trade with the US and Asian Markets.
A further attraction of PCL is its limited housing stock combined with rising demand from a growing numbers of internationally buyers. Unlike global cities like New York and Hong Kong – it is very difficult to gain planning permission for skyscrapers in central London and most high rises are built elsewhere – Centre Point tower near Covent Garden being the exception to the rule. This gives buyers the security that there is unlikely to be a huge influx of new supply in their immediate area whilst long-term demand increases – particularly from the BRICS economies.
How has PCL’s market performed over the long and short term?
Historically, PCL has comfortably outperformed other property markets and other major asset classes including major stock indices (S&P 500, FTSE 100 etc.)
However the market has struggled more than other areas of London over the last few years – albeit after achieving record highs. According to Rightmove’s London Index, Westminster (including Pimlico) is down 6.3% and Kensington and Chelsea are down 3.9% over the past twelve months. Properties in the £5m+ range have suffered the most over the past year. However as we wrote in our 2019 Spring Market Update, there are signs that transaction levels and sale prices may now be recovering.
What does this mean for buyers?
Buyers in PCL looking to capitalise on Brexit uncertainty can operate even more aggressively than in other London districts. This is particularly true for properties valued above £2m where buyers currently have more leverage. Available stock is limited in this price range but significant discounts can be secured with the right motivated seller who cannot afford to wait.
Many buyers are taking advantage of access to cheap capital with the Bank of England’s base rate still at 0.75%. Furthermore, Brexit uncertainty is leading to some international investors securing significant discounts compared to two years ago due to the fall in sterling.
Interested in buying or renting a property in Prime Central London? Contact us today for a free consultation.