Mayfair’s Decade of Residential Growth

Over the last few weeks I have been interviewed and also given a presentation to some of London’s leading architects and interior designers.

The subject was the incredible resilience and amazing bounce back in prices for the residential market in prime central London (PCL).

My prediction for the future is

“Mayfair will see
the greatest growth
for residential values over the next decade
of any prime central London residential area.”

Here are the highlights of my interview which I have posted on our website.

Q: Tell us about the property market in 2010

A: It has been a market broken into two segments – the Best and the Rest.  Volume of sales and capital values are down across the country but PCL has had an amazing performance in values returning in some cases to 2007 levels.

London is no longer competitive in value due to the price rises but it still has a massive comparative advantage on the world stage

•    Infrastructure
•    Culture / Education
•    5* Hotels / Restaurants
•    Banking / Financials
•    GMT
•    Security and quality

Q: What has made Mayfair stand out?

A: 300 years of infrastructure and good estate management has made the area a world brand where international investors wish to live and invest.  Add to this the changing working requirements of modern day offices and the reversion of period buildings back into original residential use and we have a very exciting area indeed.

Q: So has 2010 been a good year for property?

A: Government action through QE has averted the recession turning into a depression and the proposed Government cuts, although bringing in austerity, will lead through hard work into prosperity once again.

The fear of rampant inflation has prompted wealthy investors to dump cash and invest in tangible assets.  Bricks and mortar, fine art, gold and even antique cars are back in fashion as those who are cash rich fear a 1970’s inflation conflagration.

There are 26 million homes in the UK and the banks need to start lending again.  1.6 million house sales in 2007 and last year saw half that.  Estimates for 2010 indicate a little more run at only 890,000.

Q: What about 2010 for Mayfair and Wetherell?

A: For Mayfair and the rest of PCL the market has been amazing in value terms but still not in volume of sales.

In Mayfair & St James’s our database indicates that although the number of sales are 50% up on last year they still represent half the value of 2007 sales

•    2007    x165 units    £400M
•    2009    x93 units    £170M
•    2010    x140 units    £210M

In 2009 the demand was up to £10M but this year the prime market has returned with big ticket sales of £25M – £30M.  Wetherell commanded 20% market share of number of units sold in 2010 but 25% of value due to sales at the upper end of the market.

Q: What about the property market as a whole?  How do you see the future?

A: The banks need to stimulate the mortgage market; in 2007 over 200 lenders distributed £108BN of loans which dropped to only £65BN in 2009.

In August 2007 there were 986 mortgage products available with a 5% deposit – in September 2010 there were only 25.  Conversely there are now 234 products available offering a 40% deposit whereas in August 2007 there were 23.

I see London and the South East leading UK Ltd out of the recession and it will be the small businesses employing under 250 workers that will power this recovery and take up the slack in the employment pool.

In 2009 small businesses accounted for 99.9% of enterprises employing 60% of the private workforce amounting to 13.7 million people, turning over £1.5TN and most importantly 33% are located in London and the South East.

There might be 6,000 companies employing more that 250 people and turning over £1.4TN but the small companies pay more tax and are the bedrock of the economy.

Q: Lastly – What is the future for Mayfair?

A: As I said previously, Mayfair will be the best growth area of the decade, we have had no new residential developments since 2004 and the first new ones will come on stream late 2011 and 2012.

Wetherell are currently advising on over 500,000 sq.ft. of development projects with a further 250,000 sq.ft under appraisal.  There is a further 500,000 sq.ft. currently controlled by the banks.

There is 12.2M sq.ft. of commercial space in Mayfair and companies are now taking smaller headquarter offices.  Combined this with the cost of higher transport and wage demands and it is not surprising that companies are looking to relocate especially as  these buildings are worth more as residential.

With an ever increasing awareness of a companies carbon footprint and demands for functional space combined with the ability to offer vacant possession on these buildings – what better way to celebrate 300 years of Mayfair infrastructure than looking forward to the next decade as Mayfair’s building opportunity.

A four bedroom Mayfair flat I valued in 1982 at £325,000 is now £3.25M!

Take a closer look at Mayfair.