December 2019

Looking ahead to 2020

For many buyers and sellers in prime central London, 2019 was a year spent on hold. The lack of clarity – over Brexit, the direction of property prices, the future of the global economy – encouraged many potential sellers to sit on the sidelines and buyers to keep their powder dry.

Will 2020 see the market unlocked? Will prices decisively rise again? With all the usual health warnings about making predictions, we’ve put our heads together here at Black Brick to try to identify some of the trends we expect to see in prime central London in the year ahead.

A growing preference for selling ‘off market’ The recent slow market has driven a rise in off-market sales, where vendors avoid posting their properties on online portals, instead marketing them discreetly.

In a market where properties can take many months to find a buyer, such an approach avoids ‘date stamping’ a property, making it look unattractive if it fails to sell quickly, and allows vendors to reduce the asking price, if required, similarly without publicly tainting the property.

As private bank Coutts notes, the number of new instructions is down 45% from the 2014 peak; this places a premium on the services offered by well-connected buying agents who are able to access off-market stock. This year, a third of the properties we acquired for clients were sourced off market.

A continued flight to best-in-class While the market overall has been slow, competition has been fierce for high quality properties in good locations, a trend we expect to continue into 2020. This year, 82% of our clients were looking for properties in prime central London – and for good reason.

Not only does PCL offer considerable security in terms of long-term appeal, it also represents good value. Prices in prime locations have fallen in percentage terms more than elsewhere in London – average prices across London are down 15.2% since 2014, according to Coutts, but falls in prime areas have dropped more than 20%. These areas also saw prices falling first, , making these areas likely first in line for the recovery when it comes.

Attractive opportunities in new build There are significant discounts that can be achieved on new-build properties due to developers wanting to de-risk and sell in bulk to investors. The sale by Capital & Counties of its Earls Court development at a 16% discount to its valuation in June is an – admittedly large-scale – example of this trend.

In addition, as a number of developments around London approach completion, some buyers who bought off-plan several years ago are facing paper losses, and the choice of having to put more cash into the deal or pull out. Some of the deepest discounts we achieved during 2019 for our clients were in new builds, such as the 18% reduction we achieved on our Young Street acquisition.

A new breed of buy-to-let investor Recent tax changes have forced small investors from the buy-to-let market, but the sector is increasingly attractive to large professional investors. We have seen a return in demand for buy-to-let properties in 2019 from deep-pocketed buyers less reliant on borrowing, and those who can structure multi-unit deals as corporate purchases, which can achieve favourable tax treatment.

The beginnings of a price recovery – depending on the General Election… Price falls in the prime London market have bottomed out over the last year or so, but a definitive recovery remains elusive. However, the first of the 2020 property forecasts – from estate agency Savills – pegs price growth in PCL at 3% in 2020, rising to 6% in 2021 and totalling 20.5% over the next five years.

That forecast comes with a proviso: it depends on “a Conservative government with a slim majority in parliament, combined with a bottoming out of sterling, [which] would provide the platform for a recovery in this market”.

We would agree. At the time of writing in mid-November, the polls are pointing to a working majority for the Conservatives, although in such a fluid political environment, predictions are even more difficult than usual. While the likelihood of a majority Labour government is considered by one leading pollster as “close to zero”, a Labour-led coalition, leading to another EU referendum, more uncertainty, and stalling a property market recovery, is a possibility.  

…but facing headwinds from another tax rise One negative for the market from a Conservative majority would be their pledge to increase Stamp Duty paid by overseas buyers by 3 percentage points, increasing the top rate paid on the most expensive properties to 18%. We think such a surcharge – while it mirrors those imposed by other international cities such as Hong Kong, Singapore and Vancouver – would be a negative for PCL, although we would expect the market to absorb the increase as it has with earlier tax rises.

Regardless of the outcome of the election – or the development or otherwise of the trends we forecast above – we look forward to helping both our existing and new clients realise their property ambitions in 2020.

The best buys of 2019

Best investment deal – Young Street, Kensington W8 

We secured an 18% saving on the asking price, with all apartments quickly let for two years and looked after through our Property Management service – the perfect total solution.

https://www.black-brick.com/young-street-2

Biggest saving: The successful conclusion of our client’s 10-year search, with the ideal property and a huge 20.5% discount from the asking price.

https://www.black-brick.com/kensington-court-gardens 

Best managed sale: The property was sold off-market for £500,000 more than other agents thought the property would fetch.

https://www.black-brick.com/garrett-street 

Best starter home: First-mover advantage is everything in the sub-£1 million part of the market. We moved fast to avoid potential competition while also managing to save our client £50,000.

https://www.black-brick.com/cornford-grove 

Best use of social media: The power of Instagram! Within 24 hours we had secured a buyer, at the asking price, for this unusual opportunity.

https://www.black-brick.com/allen-mansions-2

Acquisition of the month: Oceanic House, Trafalgar Square, SW1 – £3.4 million

Our South American client had identified an apartment in a unique property – Oceanic House, the headquarters of the White Star Line from which tickets for the RMS Titanic were sold, and which has now been re-developed into seven luxury apartments. The client and her trustees wanted specialist advice on pricing and negotiation, and assurance that the client was purchasing the right property on the best possible terms.

Before engaging Black Brick, our client had initially wanted to purchase the show apartment; developers often ‘dress’ the weakest apartment to increase its appeal. We identified an alternative, more attractive flat in the same building which was larger, with a better layout and improved position. We negotiated a huge 19%, or £800,000, discount from the asking price. We also introduced a specialist mechanical and electrical surveyor to review the building’s recent refurbishment, who identified a substantial list of snags requiring attention, ensuring the property was handed over in fully working order.

The entire process was managed and overseen by us in order to protect our clients best interests. While buying new builds or redevelopments can appear to be straightforward, an experienced eye can often spot pitfalls that non-professionals fall into.

On the market 1: Ebury Street, SW1W – £2.85 million

Black Brick is delighted to offer for sale this three-bedroom, two-bath newly refurbished apartment within a prestigious portered block. The fourth-floor property is in the heart of Belgravia, close to Victoria Station and within walking distance of Sloane Square, Knightsbridge and Mayfair. The spacious 1,563 square foot apartment has two receptions and two balconies, and benefits from underground parking, concierge service and a lift. The property is leasehold, with 169 years remaining on the lease.

To download the full brochure, please click here.

For viewings please contact Tom.Kain@black-brick.com or call +44(0)20 3141 9861.

On the market 2: Henry Moore Court, SW3 – £4.95 million

We are currently also offering a rare opportunity to purchase a newly refurbished apartment in one of Chelsea’s most prestigious residential developments.

Located on Manresa Road, a quiet turning just off the Kings Road, the three-bed, 1,988 square foot apartment has three bathrooms, two underground parking spaces, as well as a storage room and 24-hour concierge and security. It also benefits from a 991-year lease.

To download the brochure, please click here.

For more information, or to arrange a viewing, please contact Caspar Harvard-Walls on +44 203 141 9861 or email: chw@black-brick.com.

Happy Christmas!

Finally, we would like to thank all our clients and introducers for their custom and support in 2019, and we wish you all a merry Christmas and a happy and prosperous new year.