What is prime central London’s enduring appeal?

London retains its allure for ultra-high-net-worth individuals, demonstrating once again its resilience in the face of a challenging global landscape. That’s one of the main findings from the latest Savills prime central London (PCL) report, which looks at the most desirable property with reference to location, standards of accommodation, aesthetics and value. The report reveals that, despite facing economic headwinds over the past decade, London has remained resilient. During this period, 4,200 sales have taken place at £5m or above (a total spend of £46.4bn), while international buyers have outweighed international sellers.

“For buyers in this market, London looks particularly ‘good value’ relative to its peers,” explains Lucian Cook, Savills head of residential research. “Indeed, our prime house price index shows that values across central London remain 19% below their 2014 peak in nominal terms, 40% below on an inflation-adjusted basis, and 39% below for a US dollar buyer. This, in a city with 16% more ultra-high-net-worth individuals than its nearest European competitor, Paris.”

The prime central London lifestyle has considerable appeal, from the city’s handsome architecture and glorious parks to its world-class culture and restaurants. Resonance Consultancy, a leading adviser in tourism and economic development, recognised London as the “capital of capitals” for 2024 – the ninth consecutive year that the city has headed this global ranking. Add in a host of new restaurants and five-star hotel openings, led by The OWO in Whitehall, as well as excellent educational institutions and extensive transport links, and it’s easy to see why London scores high.

Political and economic factors also play an important role when choosing where to live. One question often asked by buyers is the potential impact of rule changes expected in the autumn budget, particularly when it comes to non-UK domiciled individuals who pay UK tax. The PCL report seeks to answer these concerns.

Domestic buyers have increased in number, the report finds, with many choosing a pied-à-terre to add an urban base to their property portfolio alongside their country retreat. And while international buyers have consistently outweighed sellers in the capital over the past 10 years, in 2024 more American buyers than ever have entered the market, taking advantage of a favourable exchange rate. The busiest price point in the Mayfair sales market has been in the £1m-£5m bracket, which has accounted for 50% of sales there.

“The report confirms London’s standing as a truly international city, steeped in wonderful history,” says Liza-Jane Kelly, Savills head of London residential. “The capital is composed of a series of intimate and unique village-style neighbourhoods with strong local community spirit – Mayfair, Kensington, Marylebone, Belgravia and so on – and this is a big part of its appeal. 

“Many buyers have a real passion for ‘their’ area, whether that’s the garden squares of Notting Hill or the historic terraces of Chelsea. Demand for the finest turnkey properties in top locations remains high.”

Those locations include The Boltons and Onslow Gardens in Chelsea, and Grosvenor Square, Mount Street and North Audley Street in Mayfair. The report also highlights the prime locations getting a facelift. In Knightsbridge, a £46m upgrade to Sloane Street, widening the pavements and adding “pocket forests” to create a green, low-carbon neighbourhood, is encouraging designer brands such as Louis Vuitton and Christian Dior to expand their shops there. In St John’s Wood, after a slow start to 2024, the market ignited in July, helped by boutique developments bringing additional polish to one of prime central London’s most family-focused neighbourhoods.

In PCL lettings, the story is one of a more settled market after two years of dramatic activity and rent rises. In Knightsbridge, demand for apartments rather than houses has recovered (the same is true of sales) and the lower prime end is seeing the most activity. Agents report that a good quality one-bedroom flat could attract three offers on launch day. In Marylebone, where an increasing number of both international and domestic clients have moved from buying to renting, the lettings market is healthier than it was in 2022 and early 2023, with a stream of new-build projects easing a previous lack of stock.

In Kensington, where rents have plateaued, agents describe the upper prime lettings market (between £2,500 and £4,000) as “quiet”, with tenants scaling back their requirements. The renewals business at top price points, however, is “excellent”, demonstrating a desire for stability over relocation.

In Chelsea, the defining feature of the prime lettings market is its “return to traditional seasonality”, says Oliver Mellotte, head of lettings in the Savills Chelsea and South Kensington office. “January to March was quiet before families came out in force in April, and students and young professionals returned in the summer months. More stock is coming onto the market as landlords who could not achieve overambitious sales prices return to lettings – a theme across prime central London. Tenants are therefore in a better position than they have been since the early Covid days.”

The Savills Prime Central London report confirms London’s standing as an exceptional city. Long may it continue. 

Read the full report: In Focus: Prime Central London – 2024