Prime central London residential market in an upswing: Savills
Prime central London residential values are 15.6% over their previous peak level, with price growth expected to top 13% this year and rise by 22.7% over the next five years, according to Savills residential research.
Growth in the prime central London market is expected to slow down in 2012 with a late downwards blip in quarter four, then stalling in 2013. However, Savills says residential values in prime central London will shoot up in the years after, supported by London’s strong global city fundamentals and an improving domestic economy.
“The price growth seen this year in prime central London does not make sense in the context of the UK economy, but must be viewed in a global context,” says Yolande Barnes, director of Savills residential research.
“Central London’s residential real estate is increasingly behaving as an asset class, more closely linked to global wealth generation than any domestic indicators.”
Things aren’t so bright for UK’s prime regional market though, which is sitting on an average of 16.6% below peak and falling. These regions are dependent on domestic wealth generation and relocation from London, which has been weak during the recent recovery. They are expected to slowly resume growth in 2013.
Scotland’s prime residential prices are currently 17.8% below peak values and by 2016 will be just 7% above current peak.
“Over the next five years prime central London residential real estate is expected to outperform many commodities markets and perform in line with West End offices and UK gilts, with additional rental growth (forecast at +27.6% from 2012-2016) on top,” says Barnes.