SW1 X ranks as London’s most expensive postcode, while W1(D,F) in Soho has the highest long term growth history and W1(T,W) in Fitzrovia wins top investment postcode, according to London Central Portfolio (LCP).
A quick snapshot of the Prime Central London (PCL) residential property market made up of London’s two most exclusive boroughs, the Royal Borough of Kensington and Chelsea and the City of Westminster, reveals that the average price reached GBP1,552,400 in the first quarter of 2014. Prices have increased on average 10.64 per cent per annum over the last two decades or so, since Land Registry records were first published in 1996.
Even within this tiny area, average prices and long term growth vary significantly amongst the 200,000 properties or so that are housed within it.
LCP has therefore analysed transactional data in PCL’s 51 postcode sectors, which include the first letter and number suffix e.g. SW1X 7
Whilst some postcode sectors have been by necessity grouped together to provide a statistically significant sample size, this has enabled LCP to demonstrate the very uneven average prices and different rates of long term appreciation on an almost street by street basis.
With pockets of non-prime properties located next to traditionally affluent areas and council estates running side by side charming stucco terraces, neighbouring postcodes have distinctly different appeal. LCP’s analysis has enabled it to pinpoint the eight postcode sectors which offer the best investment record, on the basis of best value for money combined with best growth history. These will make up the core focus for its fourth property fund, London Central Apartments II, which has just launched and is accepting subscriptions.
It comes as no surprise that postcodes located within the international heartlands of Belgravia, South Kensington and Knightsbridge reigned supreme in terms of average price.
· The SW1 X(7,8,9) area of Belgravia posted the highest average price GBP4,405,741.
· This rose from second place pre-credit crunch, replacing the SW3 6 postcode in Chelsea, which at GBP3,448,195 is now rated as the third most expensive.
· In second place is the SW7 (1,2) postcode in Knightsbridge, around Ennismore Gardens and Imperial College with an average price of GBP4,064,674.
· Reflecting the vast price diversity in PCL, the SW1V 3 area of Victoria that runs alongside the River Thames posted the lowest average price of GBP593,600, almost 7.5 times lower than the most expensive postcodes.
The most expensive areas located towards the south side of Hyde Park, radiating out in an arc towards the west and the east.
As a whole,
· 13 postcode sectors are above the GBP2million mark
· 11 of 51 postcodes sectors have average prices of less than GBP1m.
· The other half of the postcode sectors are between GBP1m - GBP2m.
As a ‘go to’ destination, a financial centre, and premier league provider of education resulting in demand outstripping supply, it is again no surprise that price growth in PCL is consistently high across all postcodes. Even at its lowest (SW1V 3 in Victoria which also records the lowest average price) long term average price growth has been 8.24 per cent per annum, far higher than most other asset classes.
From an investment perspective, the highest average price does not always coincide with the highest average growth.
· The top three most expensive postcodes [SW1X (7,8,9), SW7 (1,2), SW3 6], for example, come second, sixth and 14th in terms of long term growth levels.
· The highest growth recorded was for W1 (D,F) around Soho at an average of 14.17 per cent a year. This area is 18th in the price ranking, with an average price of GBP1,581,363.
· In total, 22 postcodes sectors record annualised price growth higher than the long term average of 10.64 per cent.
· As a general trend, the strongest price growth is seen to swing eastwards around Hyde Park – starting from St James and going up to Mayfair, Marylebone and Fitzrovia.
· These areas show an average growth rate of 12.7 per cent and make up seven of the top 10 performers.
The strong growth in these areas reflects the fact that they are in Central London’s epicentre, the best served by the Jubilee line which links to Canary Wharf, the Heathrow Express from Paddington, the Eurostar from Kings Cross and the soon to be completed Cross Rail.
High levels of growth are being enjoyed by postcodes abutting to the north of Hyde Park, in particular, Bayswater (W2 3) which has experienced 11.64 per cent per annum, ranking it 12th in the growth charts.
“As a company, LCP specialise in maximising investment returns for its clients in the Central London residential market so being aware of price points and long term growth trends in every street in PCL is vital. Despite being such a tiny area with little more than 200,000 households, there are numerous micro-markets with substantial differences from postcode to postcode. The highest growth area has demonstrated returns of almost twice the lowest despite being located less than 2 miles away from one another,” says Naomi Heaton, CEO of London Central Portfolio.
Capital appreciation is the most important investment consideration in PCL as it is the largest contributor to total returns for residential investments. Indeed, a recent survey from Sotheby’s International Realty said that whilst location is the key focus for 36 per cent of affluent buyers, an almost equal number (34 per cent) are driven by investment returns.