Updated: Sep 20, 2020
LUDGROVE NEWSLETTER (NOVEMBER 2019)
"Smart investing doesn't consist of buying good assets but of buying assets well."
With a General Election looming, the possibility of Brexit being imminently resolved and a relatively property-friendly, Conservative Government being installed in 10 Downing Street, we take a look at where Domestic and Overseas Buyers should consider buying in Prime London.
First though some context. Although the market has bounced off the lows in March 2019, Prime Central London (PCL) house prices remain -16% from the 2014 peak. Recent Ludgove research has shown that in nominal and inflation-adjusted terms, this decline is broadly similar to where historic Prime London property recessions have troughed and then recovered. At 5 years in duration, the downturn has also far outstripped all Prime London real estate recessions in the last 35 years. A recovery therefore is long overdue.
Of course, much depends on personal preference but looking more closely at local markets we can see that for the shrewd buyer, there is better value on offer than the headline -16% decline. The chart below shows the percentage change in house prices in Prime Inner and Outer London since the peak in 2014:
With prices having fallen -39% from the peak in 2014, St George’s Hill in Weybridge comes out as the all-star bargain.(†) Situated on a gated, 960 acre private estate with a world-class golf course and tennis club, St Georges’ Hill is often referred to as Britain's Beverley Hills. Prices here have fallen to such an extent that some properties are being sold with a negative land value and on rental yields of 5-6%. Typically, the area is one of the first into a downturn and the first to recover, often recovering aggressively when the upturn comes. For those prepared to do some work, Ludgrove has identified an un-modernised house located on a 1 acre, south facing plot that can be acquired around 20% below where the market is currently trading.
With its close proximity to Hyde Park and Holland Park, excellent local schools and large period properties, Kensington, Notting Hill and Holland Park is offering excellent value. Prices here have fallen 20% from peak; again a similar decline to that experienced in the 2008/9 and 1989/92 recessions. Ludgrove has access to a terraced property in poor condition that can be converted into a grand family home. Pricing here is around 10-15% below market levels.
Relatively weaker value is found in areas such as Marylebone and Vauxhall, Nine Elms & Kennington where prices have actually risen. However, we wouldn’t read too much into this. The increase can be largely explained by the significant increase in high-specification new build or refurbished properties changing the mix of properties sold. If there was also one area that has defied the odds it is Marylebone Village where the Howard De Walden Estate has over the years transformed this area into one of London’s finest.
It is Overseas Buyers however that are extremely well placed to capitalize on the weakness in the Prime London property market. By way of an example, combining the -16% decline in house prices with the -18% depreciation of Sterling against the Dollar, USD Buyers can now purchase Prime London property -34% cheaper than the peak 5 years ago. For an Israeli Shekel buyer, the discount is -42%:
Clearly Dollar-pegged currencies such as the Dirham, the Hong Kong Dollar and the Singaporean Dollar are in a strong position. Other USD pegged currencies not on our list but significant Buyers of London property also include Saudi Arabia, Qatar, Oman and Bahrain.
Below we have combined our local market analysis with the change in currency rates since 2014 to give Overseas Buyers a snapshot of where best value can be achieved. Israeli Shekel and Japanese Yen buyers in St George’s Hill are in pole position. Here property prices are -65% and -64% cheaper in local currency terms respectively. "Back-up the truck" as they say!
If you have any questions on this article or would like to find out about how we can help you purchase in Prime London, feel free to get in touch. We have exclusive access to a number of excellent on and off-market properties.
Ludgrove Property Ltd
Tel: +44 (0)207 889 2860
† Note: St George’s Hill is classified as Prime Outer London.
Biography: Fraser Slater is the CEO and Founder of Ludgrove Property. Prior to Ludgrove Fraser spent 20 years in The City. In the course of his career he was a Real Estate Analyst, the Fund Manager of a £6bn Equity portfolio for USS Ltd and the Founder and CEO of WDB Capital, a London based Fund Management business. In 2008 WDB Capital outperformed its peer group by +52% making Fraser's portfolio one of Europe's best performing Funds during the Financial Crisis. In the same year his Fund was nominated New Fund of the Year by EuroHedge. After leaving The City, Fraser started Ludgrove with an ambition to be Prime London's leading Property Buying agency with an emphasis on original research and delivering a highly value-added service to clients.
Disclaimer: Ludgrove Property Limited is not authorised or regulated by the Financial Conduct Authority (FCA) and we do not provide any financial or investment advice. We recommend that any property investor seeks appropriate professional advice before entering into any contract, and we would also advise that the value of any investment can go down as well as up and that you might not get back what you put in. You may have difficulty selling a property investment at a reasonable price and in some circumstances it might be difficult to sell at any price. We would urge you not to invest unless you have carefully thought about whether you can afford it and whether it is right for you, and if necessary to consult with a professional advisor in accordance with the Financial Services and Markets Act 2000. All information is provided strictly as a guide only, is subject to change without prior notice and does not constitute an offer of investment. The Ludgrove website should not be regarded as an offer or solicitation to conduct investment business, as defined by the Financial Services and Markets Act 2000. Investors who are resident in or citizens of countries other than the United Kingdom may be subject to local restrictions. In particular, no offer or invitation is made to any US persons (being residents of the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof), who are excluded from the services offered in this site. The information on this website and our publications has been obtained from sources which we believe to be reliable and accurate, but without further investigation this cannot be warranted