Wetherell forecasts 'V' shaped recovery in Mayfair as London housing market restarts
Wetherell is forecasting that there will be a ‘V’ shaped recovery in the Mayfair property market as the London housing market restarts, with the agency’s Q1 2020 analysis showing that the coronavirus (Covid-19) pandemic has realigned the Mayfair market, with second-hand sales paused and fall throughs up during the lockdown. The post-lockdown market is likely to be led by the new homes and lettings sectors.
The Wetherell Q1 analysis uses data from the Land Registry, LONRES and local market intelligence. Wetherell highlight that between January to April 2020 there were GBP104.7 million worth of residential property sales in Mayfair at an average sales value of GBP5.8 million (averaging GBP2,655 per sqft) with almost 85 per cent of the sales being apartments or penthouses, with the remainder comprising houses or mews properties. Of the 2020 sales, 89 per cent were pre-lockdown with 11 per cent being post lockdown. If properties under offer are added to the sales data the figure rises to GBP139 million of agreed or pending deals.
Wetherell highlight that for the first three months of 2020 Mayfair transactions were up 25 per cent on the same period in 2019 and the number of new instructions also rose 50 per cent, a reflection of the optimism in the market generated by the decisive 2019 General Election. In addition, if fall throughs and under offers are combined with sales achieved the Mayfair market – if Covid-19 had not occurred – could have achieved GBP265.7 million worth of deals in the first four months of 2020, significantly up on previous years and in-line with the Wetherell 2019 forecast for the year ahead (made prior to the pandemic).
Wetherell reveal that GBP127 million worth of properties were withdrawn from the Mayfair market during the first part of the year. However 46 per cent of these properties were withdrawn in January 2020 and were stalled due to pricing issues rather than Covid-19; of the remainder, just 15 per cent were withdrawn from the marketplace in late March or April due to the Coronavirus pandemic.
During the lockdown the volume of sales in Mayfair were down -57 per cent compared to -65 per cent for Prime Central London overall and up to -85 per cent for some parts of the market. However even during the lockdown vendors remained confident in Mayfair, evidenced by the fact that withdrawals during the lockdown were actually 50 per cent lower than 2019 during the stagnation before the General Election.
Now that the housing market has been restarted by the government and the market emerges from lockdown Wetherell anticipate a ‘V’ shaped recovery for Mayfair characterised by sales and lettings deals starting to rise and new important sales and rental instructions coming onto the market. Wetherell expect the Mayfair market to be active through the summer and beyond due to overseas summer holidays not happening and a significant amount of pent-up property demand carrying over from the post Election buoyancy at the start of 2020.
Wetherell highlight that the Mayfair market is significantly different to the rest of London since effectively most sales are “cash purchases” with buyers not reliant on mortgages. Over 65 per cent of deals are done by international buyers, far higher than other districts which are more reliant on domestic buyers.
During the lockdown this cash-buyer market meant that the number of reservations in Mayfair done remotely via ‘virtual tours’ was significantly higher than other parts of the capital and post lockdown it means that buyers can act quickly since they are not reliant on lenders, enabling Mayfair to lead London’s recovery as it has done in previous slowdowns.
Wetherell says that in this new restarted market some applicants are likely to initially be most interested in reviewing unoccupied brand-new homes or empty newly refurbished properties. Wetherell believes that this will provide a ‘competitive advantage’ to luxury new homes developments such as Clarges Mayfair, The Bryanston and One Molyneux Street but that this will only be short term as people adjust to the ‘new normal’ and over time become confident at visiting occupied properties.
Due to hotels being closed and sales stalled the Mayfair lettings market has been extremely buoyant during the lockdown period. Whilst lettings enquiries initially dropped for the first two weeks post lockdown, Wetherell is now experiencing rental enquiries at the same level as pre-lockdown and there is now 20 per cent more stock on the Mayfair lettings market due to sales being stalled or owners seeking rental income.
Wetherell is now registering between 25-30 new private applicants a month and 10-15 new corporate enquiries a month, and these people are being briefed remotely on empty lettings instructions based on photos, videos and virtual viewings. Interest is also global with Wetherell registering lettings applicants from over 20 different nationalities since the lockdown began.
Wetherell has secured one bed lets at GBP950 per week, two bed lets at GBP1,950 per week and three bed lets at GBP1,150 per week and tenants have made offers on a five bedroom Mayfair penthouse for GBP5,000 per week and a four bedroom townhouse at GBP8,000 per week. Tenants have been agreeing long 2-3 year tenancies and wanting to have somewhere they can self-isolate in safety during the ongoing Coronavirus situation.
Wetherell forecasts that the lettings market will continue to be active since there are those that will be planning on coming to London later on in the year such as businessmen and affluent students. Despite travel restrictions they generally expect to be here after the summer and will make sure they have secured somewhere to live in Mayfair with the apartment buildings along Park Lane and around Shepherd Market being particularly popular with overseas students.
Peter Wetherell, Founder & Chairman of Wetherell says: “Prior to the Covid-19 lockdown the Mayfair sales and lettings markets had a strong start to 2020. Now that London’s housing market has been restarted we believe that Mayfair will have a ‘V’ shaped recovery and that the district, as it has in past slowdowns, will lead the capital’s recovery. We believe that early interest will be focused on the new homes and newly refurbished sectors with applicants particularly interested in unoccupied homes with brand new interiors. The Mayfair lettings market is highly active and concerns about hotels used by lots of people will ensure that the luxury lettings market will now become a really serious alternative to the hotel sector in Mayfair for 2020 and probably 2021. In uncertain times the wealthy always favour investing in assets such as prime property, gold and government bonds so I am very optimistic about the market outlook for Mayfair over the next 12-18 months.”