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 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 £3million. 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 £1million 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!
If it’s the West End for a meal and a show followed by a cocktail at the Ritz, then head for Arlington House Apartments.
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 firstname.lastname@example.org
Not only is our service the best in the industry, it is also free! We look forward to helping you very soon.