The Rise and Rise of London Serviced Apartments
The concept of serviced apartments is still a very young one. The very idea is said to be no more
than 35 years old and has its origins in the United States where
developers in the 1980s began taking unsold apartments off sale and
converting them for use as serviced accommodation. A
growing demand from tourists and business travelers for more flexible
home-from-home living was instantly met and in turn, property owners
achieved both an income and a capital gain but without
being tied into long term leases.
Since then, serviced apartments
became a property sector in its own right and has enjoyed many different
degrees of expansion, growth and development around
the world albeit with plenty of regional and territorial distinctions.
Something that interests us at J&K Apartments is that our 2
principal partners have over 25 years experience between us in an industry that might only be 30 years old in the UK.
Something else that interests us is that clearly we are operating in an industry in its infancy. It’s
exciting to imagine that we are playing a small part in shaping its
future. It is also worth remembering that the backdrop for us is a City
with a remarkably rich property history and where, despite the Great Fire of 1666, you can on any day still visit buildings dating back to the 11th Century.
It’s fascinating to wonder and consider the nature of trade in land and property all those years ago
in Britain’s Capital and of course the sums and currencies involved.
Even a mere century ago, the cost of a street of homes in central London
wouldn’t be enough to buy some parking on the same
street today. More apparently though, we need only cast our minds back a
mere 20 or 30 years to witness the remarkable growth figures of
property on London’s great central estates today. What
used to be expected over generations is happening at such an
accelerated rate in these prime areas, that the economic dynamic has
been altered and Prime Central London residential property is a unique and powerful asset class in its own right.
The average house price in London is now well in excess of £400,000.00 which shows a rise of 559%
since tracking began in 1983. The national average increase for the UK
over the same period is 428%. There is no doubting the attraction of
London as a place to visit, to live, to work, and to
invest. For the first time in 5 years London once again tops Global
Investors ranking of cities for property investment. The reason behind a
return to the summit of this league table ahead of theUS
quartet of New York, San Francisco, Houston and Los Angeles, no doubt
has its basis in economic recovery. Also significant is the seemingly
insatiable foreign buyer interest in the UK Capital’s property, particularly investment in new property.
Prices in the Capital show no signs of dropping either with an expected rise that could reach 25%
between now and the end of 2018. Although this increase is the centre
of a national trend, the demand for Prime Central London property is
fuelling these confident capital growth forecasts. In
the face of this growth in prices, some observers have predicted that
the traditional 21 or 25 year mortgage finance loans will have to be
offered alongside, or even replaced by 40 year versions which could become the norm for London and the UK.
Everybody has heard news of billionaires from around the world buying lavish houses in London for tens of millions at a time in the likes of Knightsbridge and Belgravia where the average house price is close to £3.00 million. Indeed, if many reports are to be believed, the same demographic of
Ultra High Net Worth individuals and families are buying up great
chunks of London’s property. These homes often form only part of
private residential portfolios but it would seem that when it comes to trophy assets, a prime central London home is regarded as a jewel in the crown.
Furthermore, almost 75% of new Central London homes are owned by overseas buyers. This may
be the top of the property tree in the UK but it’s no wonder that some
commentators have been moved to describe London property as a form of
global reserve currency.
Although the perception of London property purchasing by overseas buyers may seem to be
surging or at least growing as part of an undeniable trend, just how
true is it and how much of this perceived domination of the Capital’s
assets is real. It may be surprising news but according to the National Housing Federation
there is actually only a negligible difference in proportional
purchasing terms of overseas buyers between 2013 and 1990 for example.
This could be because it’s easy to think of overseas or foreign buyers as non UK-resident when that certainly isn’t the case.
For example in the 12 months from June 2012 to June 2013 just under half of all Prime Central London property sales in excess of £1.00 million
went to foreign buyers by nationality. However only just over half of
those buyers were non-resident in the UK. And to emphasise this point
further, one of the world’s (and London’s) leading Estate Agents, Knight Frank, estimated that from 2011-2013 between 85%-90% of all newly built purchases in Greater London have been by UK residents.
If prices for prime sales in London are growing, the story is very different with prime rental property
which seems to be flat lined. A series of small reverses at the end of
2013 have been followed by a modest increase of 0.1% in the first
quarter of this year. The result of those figures shows simply and bluntly that the market is just about where it was 12 months ago.
Significantly these stagnant-looking figures are not the result of disappointing levels of demand as rentals in the private sector continue to rise. Stock and supply in the prime areas is not keeping up.
The volume of new build property from those overseas buy-to-let investors in prime areas of
London like W1 and SW1W has resulted in some downward pressure on
growth of rentals in those areas. Single percentage figure rises in
rental growth in the last 12 months have been rare and isolated in London’s core, prime post codes.
In turn it appears that rental growth performance in commuter zones has comfortably outperformed
Central London. Reasons for this include the willingness of
professionals with young families to relocate within the UK and from
London to the prime areas of the South East. There is
no doubt that whilst a commute presents apparent downsides; when
assessed in value terms, whether renting or buying, the difference in
GBP per square foot between Prime Central London
and the leafy suburbs within an hour’s reach remains a proposition
considered worthy by a growing number. Interestingly, this isn’t limited
to UK tenants because, perhaps surprisingly, says research by Savills, another international UK based agent, 37% of tenancies in the highest value commuter zone were signed by Internationals.
As ever, the rental market, indeed all markets will be dependent on being underpinned by broader
economic and political backgrounds but with increased building and
development programs to combat shortages and meet demand both in Prime
Central London and the suburbs of Greater London and beyond into the South East, steady growth looks set.
The fascinations and mechanics of London’s property markets are as interesting and watchable as
the great city itself. London continues to lead as a financial centre,
and as a cultural, historical and monumental attraction for tourism,
business and leisure. The serviced apartment industry grows
with each quarter and offers the most flexible luxury accommodation
that the Capital can offer in locations to suit every requirement.
Having looked a little closer at some of the features, elements and effects of both sales and rentals
markets in Prime Central London, how does the younger Serviced
Apartments sector sit by comparison. Well, seasonal pressures will
continue to shape performance in the short term with
demand comprehensively outstripping supply during peak seasons,
particularly in the Summer months. Although many major apartment
developers and other suppliers continue to invest significantly in new buildings, the challenge remains to keep up pace with a growing demand for this type of accommodation.
Our advice when visiting London, whether it’s for an indefinite business assignment, a family
vacation or to spend a night watching a sporting event in the Capital,
is to make your accommodation enquiry as soon as possible as part of the
concept of your trip. Take full advantage
of the experience, expertise and advice available to you from the
directors at J&K Apartments and enjoy a bespoke trip to London as
never before. We can procure preferable rates, upgrades and
additional benefits as well as help with other services such as
chauffeurs, theatre tickets and restaurant bookings as required. Our
clients range from private individuals on a single night stay,
through to families on once-in-a-lifetime vacations, to giant corporate
relocations and Hollywood studio cast and crew solutions across London
and the South East.
There are a multitude of options to explore in locations all over the Capital which can provide the perfect
base for your visit. If Knightsbridge is the place for you with its
elegance and style, restaurants-a-plenty and charming boutiques, then we
recommend Beaufort House Apartments.
In St James why not stroll through the park and past Buckingham Palace, back to your
luxury apartment at 51 Buckingham Gate.
With accommodation ranging in size from junior suites to the fabulous
‘jaguar suite’ – this is the place to be. Take a moment or two for
yourself in the spa or perhaps a treatment in your room? Lunch at
Bistro 51 and perhaps dinner at the delicious Quilon restaurant on
site. Afterwards you may fancy a few drinks in the Zander Bar which we
believe is still considered to be the longest bar in London!
Or if you would prefer a view like no other, then call us to book you a Tower View Apartment at the brand new
Cheval Three Quays. The new gem from The Cheval Group and with reasonable rates, this really is an excellent block of London serviced apartments.
Whatever
your requirement, be it for business or pleasure, for a night or a
year, we at J&K Apartments are here to help. With our in depth
knowledge of this industry and our personal service, we hope that we
will be your first port of call.
With
Easter next week and summer around the corner, do contact us as soon as
you have your dates so that we can start an availability search for you
and recommend the most suitable options. In addition to
Knightsbridge, Kensington, Chelsea and Mayfair, we can also offer some
excellent apartment options in the City and Canary Wharf. Further
afield we have apartments in Richmond, Surrey and Berkshire.
We
also offer a select range of boutique London hotels. These are hotels
of our choosing which we feel offer a certain charm or have a unique
feel, so please do ask us about these.
Contact J&K Apartments on
+44(0)1797 253 823 OR enquire@jandkapartments.com
Not only is our service the best in the industry, it is also free! We look forward to helping you very soon.
