PRIME CENTRAL LONDON: AN INTRODUCTION
Where exactly is Prime Central London?
Prime Central London (PCL) has no fixed definition, it is loosely defined as a collection of neighbourhoods surrounding Hyde Park. More relaxed definitions include areas further afield such as Fitzrovia to the East and Holland Park to the West. A quick way to define PCL are the postcodes surrounding Hyde Park (with exceptions like Bayswater) and extending further South to Chelsea.
Notable PCL neighbourhoods include: Belgravia, Chelsea, Kensington, Knightsbridge, Mayfair. Areas further out such as Marylebone, Fitzrovia, Notting Hill are included in some, but not all, indexes tracking sold prices across prime London. Despite it’s geographical location, Hampstead is also included in some indices.
Beyond this other Prime London is defined by some data sources such as LonRes as other expensive postcodes elsewhere in London including Hampstead and Marylebone.
What makes Prime Central London so desirable?
Aside from the obvious benefits of living in London’s most desirable neighborhoods, PCL is regarded as a financial safe haven 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 throughout the day.
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 – although there are exceptions to the rule such as Centre Point tower. 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.
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.
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.