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Overseas investors help Mayfair new-build achieve 107% price premium

Posted by: In: Real Estate 15 Nov 2014 Comments: 0 Tags: , , , , , , , , , , ,
Mayfair attracts wealthy buyers from overseas

The average value of property at Clarges Mayfair averages £4,750 per square feet, a 107% premium over adjacent homes, pushed up by scarcity and rising foreign demand, says agent, Wetherell

Prime new-build homes in Mayfair London can fetch twice as much per square foot as nearby property – largely thanks to overseas demand, a leading agent has revealed.

The recently launched Clarges Mayfair averages £4,750 per square feet, a 107% premium over adjacent homes, says leading London agent, Wetherell.

This compares with a 74% price premium achieved in 2004 by 21 Davies Street (£1,331 per square feet; a premium of 44% in 2002 by Park Lane Place (£1,020 per square feet) and a 27% premium in 2000 by 1 Carlos Place (£726 per square feet).

Peter Wetherell, Chief Executive of Wetherell says, “Back in January 2014, Wetherell forecast that the best Mayfair properties would hit a new £5,000 per square foot record during the year. Some in the property industry queried my calculations, however in September my call was proved right when Clarges Mayfair broke the £5,000 per square foot barrier and generated £210million-worth of off-plan sales. The quality of the pipeline leads me to firmly believe Mayfair remains on target to hit new price benchmarks.”

The 80-point jump in premiums has been triggered by a rising international demand by ultra-high-net-worth investors for luxury residential property in London’s best addresses; viewed as a safe haven to ‘park’ wealth in an increasingly uncertain global political-economy.

The potential for lucrative returns in the Mayfair development market has triggered a wave of planning applications and inward investment from British, Middle East and Indian funders and developers with a £3.75billion-£4.5billion pipeline of new luxury developments.

There are currently 447 units in the Mayfair development pipeline, of which 67 are currently under construction, 274 have planning permission and 106 are part of planning applications. Most are former office, embassy or government sites being converted for residential use.

Crucially, the planned projects are dominated by larger multi-unit developments offering five-star hotel style lifestyle facilities such as concierge, health spa, gymnasium and private cinema.

Sixty per cent of the planned new units for Mayfair are contained within just 11 development schemes, which will create 1.5 million square feet of new residential space. Each of these 11 schemes contains an average of 25 luxury residences which will bring to the market some 285 new ultra-prime homes.

Of the 11 large schemes, 82% are new-build or new-within-retained-façade projects, containing a significant number of three-bed plus properties.

Greenery plays a critical role in the location of these new developments, with the world’s super-rich happy to pay a price premium to overlook Green Park or Grosvenor Square.

Historically, Mayfair has suffered from an undersupply of new-build luxury property, generating intense demand when stock has become available, says Wetherell in its new Mayfair market report, The Rise of New Developments, which can be downloaded from its website.

“The latest Wealth X/USB figures also show that there is an existing market of UHNWI for this pipeline stock. I have always stated that lack of stock, not lack of demand, has historically ensured that Knightsbridge not Mayfair has held the crown as London’s top residential address. It is very clear that a huge transformation is taking place in the Mayfair residential market, and Wetherell forecasts that Mayfair will eclipse Knightsbridge was London’s premier residential address.”

Dataloft, the market intelligence group, was commissioned to analyse Lonres, EGi and Westminster planning data, combined with Wetherell local market knowledge, to review existing and planned luxury multi-unit residential development in Mayfair dating from 2000 to 2017.

Currently there are no high-volume house builders undertaking ultra-prime schemes in Mayfair. Instead, the luxury market is controlled by three distinct types of operator. The first are design houses backed by wealthy investors: Finchatton, Oakmayne Bespoke, Fenton Whelan, Luxlo and Earlcrown. The next are investor developers: Brockton Capital, Amazon, Native Land, Glebe and Derwent. The third are landowners: British Land, Caudwell Properties, Grosvenor, Motcomb Estates and Land Securities.

Wetherell has also compared this pipeline of large schemes and new-build lateral residences to the much smaller scale of Mayfair development over the past 20 years. From 1994-2006 just 52 new projects (an average of four per year) were built in Mayfair, of which almost 80% contained less than 10 units and around 70% were office to residential conversions and/or refurbishments of existing properties.

By Adrian Bishop, Editor, OPP Connect
Twitter: @opp_connect

Source: OPP


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