QIB-UK Presents View From London Report for H1 2023

Doha, Qatar: QIB-UK, based in the heart of London’s Mayfair district, gives an expert view of the real estate market in the UK and London in particular, which remains one of the top international destinations for Qatari nationals.

In the face of increasing concerns over rising interest rates and increased price sensitivity, prime London residential values have remained remarkably resilient this year particularly in the city’s exclusive central districts, according to international real estate firm Savills.

The fundamentals of what attracts residents to London remain clear – business hub, connectivity, time zone, tourism and education – and buyer demand has continued to be stronger than many had expected.

In the first six months of 2023, new buyer registrations across Savills central London offices were 44 percent higher than their pre-pandemic average. For tenants, that figure is 31 percent  higher when compared to H1 2019, clearly underscoring the appeal of living in the UK capital, with significant demand from corporates relocating from overseas.

“International travel has picked up since the start of this year, led by passengers from Asia, the Middle East and the US. This has translated into increased demand, though buyers at the top end of the London market remain discerning against the backdrop of macroeconomic uncertainty,” notes Frances McDonald.

Prices across London’s prime markets slipped by 1.0 percent on the year to the end of June, according to the Q2 Savills prime London index, outperforming the wider UK market.

This leaves values 3.9 percent above their pre pandemic level, yet still 6.1 percent  below their previous 2014 peak.

This has translated into a divergence by price point with more expensive homes, those worth more than £5m, seeing prices remain broadly flat (-0.2 percent) in the past year. Property in central London worth less than £2m, a market in which buyers are more likely to be reliant on debt, fell by a more substantial 1.9 percent.

Schemes such as The OWO, Chelsea Barracks and The Whiteley have met a growing requirement for turnkey properties from a discerning group of UHNWIs who are drawn to properties that are demonstrably best in class. 

But buyers are increasingly recognising that supply of such world-class properties is extremely limited, particularly when compared with __cpLocations such as New York or Dubai.  At current rates of sale, and with just 15 schemes currently under construction delivering homes of this size, Savills estimates that stock will be exhausted within five years.

“A lack of opportunity for developers and local government restrictions on the size of residences is likely to squeeze supply of these grand apartments that have been much sought after by the world’s financially elite, both from home and abroad,” says Ed Lewis, Savills head of London residential development.

“Prime central London must obviously deliver a wide and varied mix of accommodation to meet all the requirements, including value,  for those that call London home,  but it’s become clear that those buyers looking for the best, in one of the world’s few truly International cities, may be frustrated by the lack of choice in future years.”