Growing In The Wood

Abode2 spoke to leading London based prime estate agency, Beauchamp Estates, as their latest market research report reveals that London’s St John’s Wood has unexpectedly benefitted from the pandemic pandemonium that has hit many of the world’s prime property markets. House sales in the leafy prime central London market have increased by 41% in volume and by 12% in price (year on year).

The in-depth report titled ‘Prime Central London Markets: St John’s Wood’ looks at the history of St John’s Wood, its appeal and the performance of the property market, sales and lettings, over the last 10 years, comparing data to both Mayfair and Knightsbridge.

The report reveals that Mayfair is on average the most expensive location in prime central London for house and apartment resales, with resale prices in Mayfair averaging £2,156 per square foot, compared to £2,016 per square foot in Knightsbridge and just £1,279 per square foot in St John’s Wood. This relative value for money provided by St John’s Wood is one of the reasons that buyers are attracted to the location and therefore sales volumes have risen so dramatically.

In addition St John’s Wood has out performed both areas with average year-on-year £/square foot price growth of +9.8%, compared to average £/square foot price decreases of -7.2% and -6.3% in Mayfair and Knightsbridge respectively.

Further data analysis reveals that in all three locations there is a very clear divide in market performance between the sale of apartments versus houses. As buyers have experienced changes in their domestic arrangements, driven by the pandemic, such as home schooling, home working, quarantine and have generally seen the amount of time spent at home (inside and outside) increase, many have reviewed their needs, placing greater importance on internal space (volume) and access outside space, ideally private.

The apartment market in all three areas has seen a decrease in volumes and values, particularly in Knightsbridge, where many older apartments do not provide outside space, with sale volumes down year-on-year -25.8% and where there is a greater reliance on international buyers who have been absent from the market due to international travel restrictions. In comparison St John’s Wood apartment volumes year-on-year were down by -14.1% and Mayfair down -7.4%.

Data for house sales provides a very different picture where volumes in Mayfair, Knightsbridge and St John’s Wood were up year-on-year, +14.3%, +11.5% and +41% respectively. The large rise for St John’s Wood reflects the fact that a large proportion of the housing stock consists of low-rise detached and semi-detached houses set in generously sized gardens, which are exactly the type of properties that buyers are choosing to purchase since the advent of the pandemic. Price per square foot increases year-on-year for houses were recorded in St John’s Wood (+12.1%), another indication of the level of demand in the district, whilst in contrast Mayfair and Knightsbridge saw year-on-year decreases of -11.5% and -8.7%.

Despite there being generally fewer houses available in Mayfair and Knightsbridge, making volume analysis sensitive, there is little price premium on a cost per square foot basis for houses over apartments. This is because many of the older townhouses in both districts provide living space on many levels, where as many overseas buyers want to buy a home providing and abundance of lateral living on just one or two floors.

In St John’s Wood the premium per square foot for houses can be as high as 45%, driven predominantly by the size of plot on which a house is located and access to both outside space and private outside space: something that has been a key performance driver in the market in general.

Larger houses in St John’s Wood (many found on Avenue Road, Cavendish Avenue (West Side), Acacia Road and Hamilton Terrace) are sited on exceptionally large plots, far greater than comparable properties in Mayfair and Knightsbridge and generally speaking are subject to less restrictions in regard to development activity of single dwellings (both refurbishment and teardown and rebuild) – something many Belgravia residents might envy.

Houses on these larger plots are set to become increasingly prized, not necessarily as much for their development or re-development potential, but for the ability to secure and manage the integrity of private outside space. This will be increased further by the extremely limited opportunity for legitimate new build houses, placing an ever increasing premium on existing stock: St John’s Wood is the only area in prime central London that offers an abundance of houses with large gardens. Mayfair and Knightsbridge are generally unable to offer such houses and those that do exist come to the market infrequently and at an extreme price premium.

Rosy Khalastchy, Head of Beauchamp Estates St John’s Wood said, “St John’s Wood, the High Street and its urban village feel has always appealed to a wide range of people, but resent changes in buyers’ priorities have seen unprecedented interest in the area, particularly for larger houses.”

“Houses in the very best locations, turn key, ready to move into can command over £45 million – pre pandemic there was greater buyer appetite for development properties, but the challenges of undertaking work at this time coupled with people’s desire not to wait has created a demand  at the very top end of the market.”

“Market changes have also impacted the stock that is currently available: two years’ ago we had a number of larger houses that were experiencing difficulties finding buyers and were therefore also offered for rental. Two years on they have either been sold or secured long term tenants and there is currently little available. Some of the older apartment stock that does not have private outside has found it a challenging market, but the proximity to Regents Park and Primrose Hill means that there are buyers for whom this is an ideal compromise that enables them live close the very centre of London and have easy access to open green space.”

“While there are no genuinely ‘new’ stand-alone houses coming to market, the pipeline of new developments will bring a limited number of houses and apartments to the market over the next five year of more. Planning consent has been granted for over four hundred and ninety privately owned homes to be built, many of which are being built to a high specification and come with a range of services and private facilities - this includes projects like One St John’s Wood, St John’s Wood Square, The Landseer and a small development in the prestigious location of Hamilton Terrace.”

Gary Hersham, Founder of Beauchamp Estates said, “The advent of COVID has impacted many prime real estate markets around the world, primarily in terms of buyer priorities, none of which has resulted in the mooted mass exodus from cities. It has certainly reshaped demand in some locations and changed choice of location.”

“Some super prime buyers have traded Mayfair and Knightsbridge for Surrey, but many more have trade them for Regents Park and St John’s Wood – on a long-term basis property close to central London and protected green space is always likely to see positive capital growth and potential yield increases.”

“The prime central London market has been increasing its geographical spread over recent years, creating the ultra prime sales and letting market in Regents Park, the subject of a 2019 report by Beauchamp Estates, moving on through to the northern reaches of St John’s Wood, to gradually connect with Hampstead.”

The appeal of St John’s Wood shows no sign of diminishing and its upward trajectory of appeal and price seems set to continue, as buyers place an ever greater emphasis on space, green space and living local, particularly in times of restricted or curtailed freedoms, such as those brought about by Coronavirus.

While the market for apartments in St John’s Wood, sales and lettings, has experienced a challenging 12 months, the dip in volumes and values is likely to be temporary. The central location of St John’s Wood, it’s urban village and relative value will ensure a return to more bullish form in the coming months.

The market for houses in St John’s Wood has forged ahead, out performing every area of central London. The last few years had already seen substantial price increases, particularly in Avenue Road, Hamilton Terrace and Cavendish Avenue (West Side). This was in part due to the fact that a number of the 5,000+ square foot houses had secured permission to extend, either by knocking down and re-building, or by adding basement areas for leisure facilities and large garages.

The circumstances everyone faced in 2020 further added to the appeal of houses and private outside space, things which St John’s Wood is able to deliver, all in an urban village setting, close to central London. This has pushed the premiums for larger houses and particularly those on larger plots to record levels, seeing average house rental prices on a par with Mayfair and marginally more expensive than Knightsbridge for the first time.

www.beauchamp.com