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Super Prime Residential Property Prices in London Set to Soar
The cost of super prime property in Central London is set to reach £10,000 per square foot by 2016, according to a new research report from Knight Frank.
The research, which sums up the sector over the past decade and looks to its immediate future analyses the effect of One Hyde Park, the 86 apartment Knightsbridge project which is one of the world’s most expensive pieces of real estate.
It looks at how this affects development standards and buyer expectations and sheds new light on the direction the global super prime development market is forecast to take.
For the first time, actual price performance at One Hyde Park has been released, with a full analysis. It shows how values grew during the development of the iconic scheme from £4,560 per square foot in 2006, to £7,500 per square foot in late 2011. It has achieved residential sales to date of over £1.4 billion with 62 apartments sold.
It also points out the effect of the value added elements of the development which have helped make it so attractive to purchasers such as the link with the Mandarin Oriental brand and the levels of service this delivers. Others include architecture by globally recognised practice Rogers Stirk Harbour + Partners and award winning interior design by Candy & Candy.
The report suggest there is unlikely to be another residential development quite like One Hyde Park for some time and this is partly because of the lack of finance available for speculative residential schemes and also because immediately recognisable super prime locations like its Sloane Street/Hyde Park site become available only infrequently.
In the last decade, as the resale market was squeezed by increasing demand for a London home from the international newly wealthy, new build property began to fill the gap, and become a barometer of the city’s appeal to High Net Worth Individuals from Asia, the Middle East and CIS countries, the report explains.
Hotel trained concierge teams, living spaces interior designed using the best marbles, timber and technology, terraces and off street parking, all these elements became expected in developments and helped drive prices of the best prime central schemes from £1,000 per square foot in 2000 to £2,000 per square foot in 2004 and up to £3,000 per square foot by 2006.
The super prime development trend is now gathering speed in other centres for the world’s wealthy including New York, Monaco, Singapore, and Hong Kong, but only a handful of locations are approaching London’s benchmark.
‘One Hyde Park’s success has been due to the fact that it was designed and executed to meet a very specific requirement from the new international wealthy. Not only did these buyers emerge from the recession almost unscathed, but so too in some ways did central London,’ said Liam Bailey, Knight Frank’s head of residential research.
‘In key markets like London the availability of top end developments that attract wealthy international purchasers is still very limited. The opportunity for developers to capitalise on this market is therefore a real option. The problem is that the sites suitable for these developments are limited, and so too are the skills and knowledge required to deliver the right product. But get this combination right and the rewards can be significant,’ he explained.
‘Bearing in mind the £1,000 per square foot jump to close to £8,000 per square foot in the 10 years to 2011, as well as the recent success of One Hyde Park and other super prime apartment sales, I suspect this record will be broken even sooner and that the very best developments will be sold with prices of £10,000 per square foot sometime before 2016,’ he added.
