Where best to invest in central London property
09-14-2015
Understanding central London’s diverse boroughs and the changing priorities of tenants can make or break an investment. As the buzz of Fitzrovia takes over from the allure of Knightsbridge, LCP highlight the best areas to invest in
Fitzroy Square, London
Streets ahead: today’s best investment hotspots are those with below-average prices that offer the highest long-term growth prospects Photo: © Alex Segre / Alamy
Prime central London’s residential market, defined by its two most exclusive boroughs, the Royal Borough of Kensington and Chelsea, and the City of Westminster, ended last year with an average house price of £1,773,337. According to HM Land Registry, prices have increased at an average of 10.4pc a year over the past two decades.
However, even within this tiny area of just six square miles and fewer than 200,000 households, prices and long-term growth vary enormously. Pockets of non-prime properties are located next to traditionally affluent areas and council estates run side by side with landed estates.
Naomi Heaton, CEO of property asset manager London Central Portfolio (LCP), says understanding the nuances of London’s diverse boroughs can make or break an investment.
“Being aware of the square foot price and the long-term performance of every street in prime central is vital [to us],” she says. “There are myriad micro-markets or ’villages‘, and their character changes from postcode to postcode.”
LCP has analysed transactional data for 51 prime central London postcode sectors over the past 20 years to pinpoint today’s best investment hotspots – those with below-average prices but offering the highest long-term growth prospects, as well as areas on their way up.
London’s hottest investment postcodes
As average prices in Knightsbridge’s top postcodes hit £6m, it is hardly surprising that central London’s centre of gravity has shifted from these traditional enclaves to its neighbour, the City of Westminster, home to the likes of Buckingham Palace and the Houses of Parliament.
Significant gentrification, iconic architecture and all important transport links to London’s financial district and internationally, now make it the “place to be.”
London’s famous Soho is stealing the march of the new growth postcodes, followed by St James’s / Whitehall, parts of Marylebone, Bayswater Parkside and Notting Hill East.
Tomorrow’s winners
“Our prime London residential funds have always had their eyes on these up and coming areas to help create a diversified portfolio with the highest possible returns” says Ms Heaton, “but with average prices now ranging from £1.4m to £1.6m, these areas are getting very expensive and it is time to look again.”
According to LCP, future investment hot-spots are all centrally located but have average prices under £1m and lower than average growth rates. Areas such as Northern Bayswater, Pimlico Thames-side and Fitzrovia are leading the way.
With Paddington Station, Victoria Station and Kings Cross all within their vicinity and an array of rundown commuter hotels and offices transforming into “des-res”, these postcodes hold a winning hand. Add Crossrail coming in through Paddington and Tottenham Court Road, and the major regeneration of Victoria and Earls Court - and the savvy investor does not have far to look.
• For more information on LCP’s one-stop service or investing in their new fund, London Central Apartments III, go to londoncentralportfolio.com or follow them on Twitter @LCP_Ltd