Apartments are back in demand in Britain’s most expensive rental enclave of Prime Central London (PCL) locations a lettings agency says.
Demand for apartments in prime central London has risen as overseas investors return, according to Knight Frank.
The proportion of Apartment sales in PCL in Q4 2022 was 74 per cent, which was the highest level in three years, Knight Frank and LonRes data shows.
The strongest annual price growth in PCL in the year to January 2023 was in South Kensington (up 5.5 per cent) followed by Knightsbridge (up 4.5 per cent) - both are areas where the sales market is dominated by apartments.
“Returning international buyers can see there has been very little change in prices over the last two to three years and that is driving demand for apartments” says Stuart Bailey, head of prime central London sales at Knight Frank.
“Buyers are particularly motivated in more central areas and at higher price points. PCL was no different from the rest of the country and activity levels dropped in the final three months of last year.
“The feeling I get is that the effect of the mini-Budget has worked its way through the system and there is a healthy balance between supply and demand in most areas that will support the market in PCL this year.”
A higher proportion of sales in PCL are in cash, making this niche market less vulnerable to interest rate rises.
Another factor to consider is the currency discount. When price declines and the effect of a weaker pound are considered, effective discounts of around 35 to 40 per cent are available compared to July 2014 in PCL.
Average prices in PCL are still 15 per cent below their last peak in August 2015, highlighting the strength of the relative value argument. The decline for apartments is 18 per cent and 10 per cent for houses.