London's evolving skyline.

02 Jan 2019

5 fast facts from Investec’s 2018 prime property research

With Tower Hamlets on track to become London’s largest deliverer of new housing, and significant pockets of investment emerging as far afield as Manchester and Cambridge, it’s apparent that high-profile new builds are reshaping the UK’s prime property market. Here are five key takeaways from our latest research.

This year, the value of the UK prime property market is projected to rise by 17% to £37.5bn, according to Investec Private Bank’s 2018 prime property hotspots report. And helping to drive this increase is new-build development. Clearly, for those looking to diversify investments or expand their property portfolios, new-build growth is certainly an area worth keeping an eye on. Other discoveries:

 

1. Investment is going to  previously overlooked locations

 

In 2017, new builds contributed more than £5bn to the UK’s prime property market. And not just in areas traditionally considered prime hotspots. With £6.4bn projected to be generated from the sale of prime new builds in 2018, significant pockets of investment are currently emerging in East and South London, as well as further afield into Manchester and Cambridge.

 

“It’s fascinating,” says Ryan Tholet, Head of Investec Private Bank. “The boundaries of prime property hotspots are becoming ever more elastic.”

 

And the best-value opportunities may well be in up-and-coming areas, where readily available land and evolving infrastructure mean developments are coming to market at exceptional value.

 

2. Prime Central London remains strong

 

That’s not to say areas historically renowned for their abundance of prime property offerings, such as Kensington & Chelsea, Mayfair and Knightsbridge, are showing signs of a slowdown. While overall dynamics are shifting, Kensington & Chelsea, Hammersmith & Fulham and Wandsworth are still expected to see growth in 2018, and Westminster, Wandsworth and Hammersmith & Fulham recorded the largest number of new-build sales in 2017.

 

“London’s traditional prime property markets show few signs of bottoming out,” stresses Tholet. According to our research, the boroughs of Westminster and Kensington & Chelsea alone contributed £8.2bn to the total £32bn in property sales in England and Wales in 2017.

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3. New-build development stretching outward

 

Areas of London such as Tower Hamlets, Lambeth, Lewisham, Newham and Waltham Forest are now on the prime property map – in some cases recording impressive rates of sales growth. In Tower Hamlets, 60% of prime sales in 2017 were new builds. In Newham, this figure was 56%, and in Southwark 38%. Developments such as Goodman’s Fields in Tower Hamlets, One Tower Bridge in Southwark and Nine Elms in Lambeth all ranked among the largest developments in 2017 by number of sales.

 

And additional projects are in the pipeline. In Tower Hamlets, the Poplar Riverside Housing Zone is expected to create 6,000 to 9,000 new properties by 2020.

 

4. Crossrail effect attracting development

 

Further outward, the Crossrail effect is still a factor, attracting development despite recent news of delays in completion. New builds in South Bucks made up 20% of prime property sales in 2017, with this number rising to 41% in Broxbourne – a sign that up-and-coming commuter hotspots are coming to the fore in anticipation of the Elizabeth line.

 

“It’s no surprise that the new builds that are driving the expansion of the UK prime property market overlap with areas that are experiencing, or are due to experience, high levels of investment – from developments such as Crossrail, for example,” says Tholet.

 

5. Cambridge and Manchester thriving

 

In the East, the burgeoning tech industry, including software, electronics and biotechnology at Silicon Fen – aka the Cambridge Cluster – continues to fuel Cambridge’s prime property market.

 

And in the Greater Manchester area, prime property values increased by 22% in 2017, to £229m, with the market expected to grow yet again in 2018 by a further 25%. Manchester’s renaissance has received a boost from Trafford in particular, which has demonstrated strong house price growth over recent years. (Interestingly, according to Investec Private Bank’s survey, respondents say they would be more likely to purchase a prime property in Manchester than in London.)

 

Editor’s note: Figures for the prime property market in 2018 are based on early prime property sales data for the first half of 2018. This compared the performance and value of the market in the first half of 2018 to the equivalent time period in 2017, and then extrapolated any differences for the whole of 2018 based on the whole-year data from 2017.
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