The Prime Central London (PCL) market has long been a lucrative investment opportunity for both local and international investors. Despite the pandemic and the economic downturn that followed, it has remained robust and shown remarkable resilience, with experts predicting that it will remain so throughout 2023. The future of London’s prime real estate market is in fact, strong and steady.
Read on as Rickman Properties explore the trends and factors that are likely to have influenced the market, and why.
Property Supply and Demand Trends
One of the central reasons why the PLC market is expected to remain resilient is the limited supply of exclusive properties. London is a densely populated city, and finding a prime location property that meets this market’s standards can be challenging. Additionally, strict planning regulations limit the number of new high-end properties that can be built in desirable areas of the City. This creates a scarcity of supply that drives up demand and prices.
The Royal Institution of Chartered Surveyors (RICS) quarterly UK Residential Market Survey indicates a stabilising sales outlook for London’s PCL market. While still slightly negative with a net balance of -8%, this marks a significant improvement from January’s -20% and an August low of -45%.
In the lettings market, tenant demand continues to increase according to a net balance of +32% of respondents nationally (part of the monthly non-seasonal adjusted rental market dataset).
In fact, Rightmove found that searches for homes for sale in Soho have doubled compared to the same time frame as last year, while rental searches in the area jumped by 56%.
London’s Global Financial Centre
Another factor is the City’s reputation as a global financial centre. Despite the ongoing uncertainty surrounding Brexit, London remains a hub for international business, attracting affluent individuals and families from around the world. Its world-class infrastructure, cultural offerings, and educational institutions make it an attractive destination for high-net-worth individuals seeking a desirable place to live.
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The resilience of the PCL market is also due to the pound sterling exchange and relatively low-interest rates. The decrease in interest rates has made borrowing cheaper, allowing investors to purchase exclusive properties with lower mortgage repayments. Cash sales indicate a resilient market as well.. Around half of the sales in prime central London were in cash, and the number of sales above £2 million was 66% above the five-year average in January 2023, according to February 2023 metrics by Knight Frank. In addition, the number of new prospective buyers rose 52% for those looking for residences above £2 million.
Buyer Demographics
The changing demographics of buyers can’t be overlooked, either. Younger buyers are entering this market, and their preferences are different from those of previous generations.
Today’s buyers look for properties that offer more than just an exclusive postcode; they want homes that are eco-friendly, technologically advanced, and with ample amenities. Developers have built high-end properties that cater to these changing preferences, contributing to market buoyancy.
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Post-Pandemic London
The pandemic positively impacted the PCL market, as well. It prompted many to reconsider their priorities and invest in their homes, with many buyers seeking larger properties that offer more space, access to outdoor space and overall comfort.
The pandemic also accelerated the adoption of technology as mentioned above, and this led to a greater demand for smart homes and other technologically advanced interior features.
Long-Term Stability of London’s Property Market
Ultimately, the PCL market is expected to remain resilient in 2023 due to a combination of factors and trends. These factors include limited supply, London’s reputation as a global financial centre, low-interest rates, changing demographics, and the post-pandemic landscape. Despite the challenges presented by Brexit, global economic factors, and post-pandemic concerns, this market remains a desirable investment opportunity for both local and international investors. Experts predict that this trend will continue not only in the 12-month forecast but for years to come.
Looking to buy, sell, or rent property in the London area? Contact Rickman Properties to learn more about your options.
