A combination of factors has meant land values in the capital have fallen, and property developers are capitalising on the opportunities they’re finding there.
Knight Frank’s most recent report on the London residential property market indicates that during the last six months of 2019, developers continue to look for opportunities, despite London having a shortage of land sites available.
Planning environment is affecting developers’ productivity
The new data suggests that a scarcity of available development sites has seen land prices fall. A challenging planning environment and uncertain political times have not deterred developers’ long term plans to secure new development sites across central London.
The report says that demand has been supported by a variety of factors including house builders in outer London benefiting from the Help to Buy scheme, who have enjoyed positive sales activity throughout the year.
Knight Frank believes that the medium term future of housing activity in London rests with accessibility to planning permission and timing of the UK’s departure from the European Union.
Across the capital, the decline in property prices has slowed. Prime Central London (PCL) is the sector where prices have recorded the most significant downturn, reducing by 4.4% from January to August this year.
Super prime new build winning buyers’ attention
The super prime sector has remained strong with the report revealing that the number of properties sold over £10 million has remained consistent for over two years. From 30 to 35 new homes were sold every 12 months. New homes have taken the largest market share compared to second-hand properties – rising from 18% in Q2 of 2017 to 34% at the end of Q2 2019.
This is down to more units being available to buy in prime boroughs of Kensington and Chelsea and Westminster. It is also due to a change in prime buyers’ desire for sophisticated new-build amenities.
Knight Frank’s Rupert des Forges, head of prime central London developments, said: “Prime buyers are increasingly focused on securing a London residence in a new scheme and typically they prioritise a high level of security and extensive amenities.”
He added: “Prime apartments offer a seamless move away from transient hotel living for the new generation of global wealth now driving the top end of the London market. Recently, several high profile schemes have sold out and the current planning pipeline points to constrained supply on the horizon.”