By +Eric Jafari
The London property market may
not be as stable as was originally thought, with one
expert suggesting luxury real estate price levels could be
unsustainable. Chief executive of the Grosvenor Group, Mark
Preston, told Reuters that the rate of growth in the prime sector
is beginning to look shaky, after years of overseas buyers throwing
cash into the market.
Since 2009, luxury home prices have increased by 53 per cent.
International corporations have been quick to establish a footing
in London, and as a leading business hub, its cachet has seen the world's well-heeled
relocate to the city. Consequently, high-end property has been in
high demand. The Arab Spring and political uncertainty in Russia
has also made London more attractive.
Mr Preston explained to the news provider: "The extremely high
rate of growth over the last two, three years is a thing I'm
concerned about and I think it's probably unsustainable. As those
crises recede then perhaps there's less interest in capital moving
internationally for safe haven reasons. (And) we're reaching values
in prime London that are just extremely high by historic
For investors primarily working in prime markets, this means
that it may be wise to diversify portfolios and Grosvenor are
already doing just that. Mr Preston told Reuters that the company
will be investing in Canadian residential and British rental homes
to offset risk.
However, the appetite for luxury London property can't be denied
and this isn't just visible in the residential market. Cushman
& Wakefield revealed in February that international investors
are still attracted to high-end stores in areas like Bond Street
and Sloane Street. This is turning into fierce competition and for
every store that becomes available, there are approximately ten
international brands competing for it - a rise of around 20 per
cent since 2012.
Rents are already high in these areas, but could be pushed even
higher if a landlord can secure a vacant possession and offer a
shop on open market rent. Zone A currently rents at GBP 800 per
square foot in Bond Street, rising by £200 over 2012. However, in
the southern section of the street, rents can reach £1,000 per
17 April 2013
London Prime Property Market,Luxury Property,London Property Demand