BORIS-BOOM TO HIT MAYFAIR PROPERTY MARKET, SAYS WETHERELL
The Mayfair property market is set for a ‘Boris Boom’, says the latest report by estate agency Wetherell, which reveals a polarised market with potential for significant growth over the coming year as limited stock and high demand from international buyers is set to drive sales.
Mayfair is now established as a worldwide destination and brand appealing to an increasingly young demographic, and is set to undergo the biggest changes to its property market since the 1920s. The market is split into second-hand stock and new ultra-prime developments and is buoyed by renewed confidence following the Conservative majority win at the recent General Election, says the ‘Mayfair in Minutes: 2020 Residential Market Report’ by Wetherell.
Following three years of political uncertainty, the report highlights that the average pound per square foot values for second-hand stock are now at levels comparable to the end of 2013, with 51% of sales last year reaching over £2,000 per sq. ft. compared to 18% across the rest of Prime Central London. Wetherell predicts that sales volumes of second-hand properties could increase by up to 50% over the coming year, prompted by limited stock and pent-up demand.
For buyers choosing to invest in second-hand properties, Wetherell predicts significant growth in the £5 million to £10 million sales sector, as buyers seek value compared to the new ultra-prime developments. Currently, up to 75% of the market is priced up to £5 million, with a fifth of sales last year registered above £5 million. The report forecasts a rise in demand for Mayfair mansions as an attractive alternative to the large lateral apartments in new developments, which will offer privacy and security, alongside character and historic architecture, either as a family home or with the potential to be converted into luxury apartments.
Mayfair’s second-hand stock has a strong appeal to investors and developers, who can achieve significant value uplifts in the refurbishment and redevelopment of existing homes. Wetherell reveals the major players in the current market are Finchatton, British Land Plc, Clivedale, Lodha, and REDD, the Monaco investor-developer with a £100 million pipeline across Mayfair for luxury build to let properties, ideal for young residents wanting to rent and enjoy the Mayfair lifestyle.
In comparison, the last decade has seen a building boom in Mayfair with the new landmark developments offering luxury apartments and state-of-the-art residents’ amenities. These ultra-prime residences can achieve prices between £5,000 and £7,000 per sq. ft., and have considerable appeal to international buyers. Wetherell are acting as agents on several ultra-prime developments including Clarges Mayfair, One Molyneux Street, and 20 Grosvenor Square, with the end of 2019 sales period seeing £225 million in deals agreed for Clarges Mayfair. Additionally, these new modern developments can sell at values over double that of average Mayfair prices, leading to a comparative value uplift for properties in close proximity to the new developments. Demand for these homes is set to rise as new planning policies will restrict future developments, creating a very exclusive buying opportunity.
Wetherell highlights that the international buyer demographic has shifted in recent years in both the nationality and age of applicants. Whereas new-build Mayfair property traditionally appealed to buyers from the Middle East, Wetherell reveal that buyers are increasingly coming from Hong Kong and mainland China. In addition, Mayfair is appealing to a younger demographic, with international buyers often being Millennials or younger, for example a one bedroom apartment at Clarges Mayfair which Wetherell successfully let last year for £30,000 per month to a young Millennial with the deal agreed in less than twenty-four hours.
The current demographic of Mayfair residents is a mixture dominated by Millennials and Generation Z, the ‘Digital Natives’, a steadily growing proportion. By 2021, almost 50% of all residents in Mayfair will be aged 21 to 44, and by 2030 almost one third of all residents will be Digital Natives (those born since 1995). For these younger residents, Wetherell highlights that well-placed local amenities and state-of-the-art technology is a priority. In addition, Millennials are a high-performance group, which will see the greatest growth of net wealth throughout the 2020s. Mayfair has already begun to react to the younger demographic, with global brands such as Céline and Marchesi 1824 (Prada Group) recently opening stores on Mount Street.
The Mayfair Lettings market continues to perform strongly, with half of Mayfair residents currently in rented accommodation. Although rental values have remained stagnant for the past few years, with the average one bedroom apartment currently achieving £739 per week, and two bedroom apartments achieving £1,373 per week in Mayfair, Wetherell predicts rental values will strengthen. Stock from the new ultra-prime developments is coming to the rental market with higher asking prices, as well as the new build to let properties also achieving higher values, helping to boost values.