The credit crunch in the Middle East, a lack of new homes, outdated stock and constrained supply mean Knightsbridge is no longer London’s top address.
Knightsbridge has been beaten in property pricing by rival Mayfair, which is benefitting from the introduction of Crossrail, according to research from Wetherell, which analysed Lonres sales prices and lettings values in London’s prime postcodes.
The research found that for the first time in 10 years, Mayfair apartment prices have opened up a wide value margin above those of Knightsbridge. Only in 2007, for a brief period before One Hyde Park sales and marketing went into full swing, were Mayfair prices just 1% above those of Knightsbridge.
In 2017, Mayfair apartment prices averaged £2,378 per sq ft, 6% above Knightsbridge, which averaged £2,242 per sq ft. Almost 75% of Mayfair sales in 2017 achieved £2,000 per sq ft or higher, with the underperformers explained by very short leases.
In 2016, Mayfair apartments averaged £2,314 per sq ft, just 1% above Knightsbridge, which averaged £2,299 per sq ft.
Before 2016, Knightsbridge led strongly on values, beating Mayfair by 2% in 2015, 6% in 2014, 5% in 2013, 11% in 2012 and 7% in 2011.
The research also shows Mayfair starting to overtake Knightsbridge on price indicators for both districts’ most expensive stock.
Resales in the One Hyde Park postcode now average £6,344 per sq ft, while new build ultra-prime lateral apartments and penthouses in Mayfair command values up to and in excess of £7,000 per sq ft.
There is a similar scenario in the lettings market. The highest rents in Mayfair now average £2,026 per week, which is 17% higher than Knightsbridge.
Wetherell said Knightsbridge is losing its property crown because of a combination of geography, outdated stock and new supply. While Mayfair has over 4,360 residential addresses, Knightsbridge has just 2,500, making Mayfair a more attractive residential community.
In addition, although Knightsbridge had a spate of super-luxury development over a decade ago – One Hans Crescent (built in 2001-2002), The Knightsbridge (built in 2002-2005), 17-22 Trevor Square (2002-2004) and One Hyde Park (2007-2009) – the district has had no new luxury mega-development in almost 10 years.
In contrast, 15 new residential developments in Mayfair are in the process of delivering 501 new super-luxury residences over the next five years. Examples include One Grosvenor Square, Hanover Bond and Audley Square.
Wetherell chief executive Peter Wetherell believes the Jubilee Line extension boost to resi-prices in Canary Wharf will be repeated in Mayfair with the new Queen Elizabeth Line.
The Impact of Crossrail Report forecasts that by 2021 new stations such as Mayfair’s Bond Street will help to increase residential prices in the surrounding district by 25% more than in neighbouring areas. This calculation means that Mayfair’s average apartment prices could rise to over £2,600 per sq ft by 2021, and top values to £7,875 per sq ft.
Peter Wetherell said: “Mayfair was historically London’s richest address. After 1945 many Mayfair homes were turned into offices, and planning priority was given to commercial premises. This, combined with the development of One Hyde Park and other luxury Knightsbridge apartments led to the last decade of Knightsbridge being the capital’s top address.”
DealMakerz isn’t surprised by the demise of Knightsbridge, given its reliance on investment from the Middle East.
Research suggests 70% of all Gulf resi-property investments in London are in Knightsbridge.
However, the UAE, Qatar, Saudi, Bahrain, Kuwait and Oman have a combined fiscal deficit of £184.7 billion and a combined £95.9 billion current account deficit, according to HSBC.
In contrast, there has been £331 million worth of deals over the last 12 months in Mayfair, which have helped to boost buyer and vendor/developer confidence.