Prime central London residential property as an asset class has provided investors one of the highest returns of all classes over the last decade, said a visiting property expert recently.
James Thompson, partner of Knight Frank LLP, addressed an audience of around 100 trust and legal professionals at a Barclays Wealth property seminar at Grand Jersey last month. Also on the panel were Knight Frank LLP partners, Michael Wilson and Harry Morten and Phil Spencer of Channel 4 television programme, Location, Location, Location.
The seminar, organised by Barclays Wealth as an insight into this key asset class, was designed to stimulate thought-provoking discussion on a topical area, which is an increasingly important element of many investment portfolios.
‘The property seminar is one of a series of thought leadership events which we have been running in Jersey for our clients and follows similar Barclays Wealth seminars on the topics of Russia and India, with another event focusing on client philanthropy planned for early next year,’ said Paul Savery, managing director, Barclays Wealth Intermediaries and International Jersey, Guernsey and Isle of Man.
‘Property is a widely held asset class and one which invokes emotion and attracts more interest than most. The event was not intended to be about the Barclays Wealth house view on whether clients should buy, sell or hold, but rather to provoke debate by bringing a range of experts together to provide their views on UK residential and commercial property markets as well as provide a whistle stop tour of European real estate.’
As part of this tour of Europe, Michael Wilson, demonstrated that London prime property is affordable when compared to some other key European destinations with prime properties currently selling at around €35,000 – €40,000 per square metre in Courchevel, France and prices in Paris (7th, 8th and 6th Arrondissements) reaching €15,000 – €20,000 per square metre. In Monaco prime locations are currently securing as much as €50,000 – €70,0000 per square metre, a value which was eloquently translated for the audience as ‘paying about €100,000 for a two square metres household bath.
James Thompson went on to add that more than 50 per cent of buyers of London prime property are from overseas and that due to the weaker Sterling, those buying in Euros or US Dollars are making significant savings on purchases. With London prices predicted to rise by as much as 30 per cent by the end of 2015, investments in this asset class may prove fruitful for those who can compete in this market, particularly if exchange rates continue to play in their favour. He also pointed out that since 2000, prime central London residential property has performed incredibly well, with gold being one of the few asset classes to outperform it.
Commercial property was also on the agenda with Harry Morten pointing to the percentage yield differences between prime commercial and what is considered ‘secondary’ commercial, and how this has increased significantly since the 2007 credit crunch. High yield generally means high risk, and Mr Morten spent a large proportion of his time explaining how to qualify whether an opportunity or existing investment is prime or secondary, and what the main focus areas should be for the investor. The main message? Stick to prime. Prime generally means Central London, and whilst there is a glut of office space in London today, current stock and shortage of speculative builds is expected to lead to a real shortage of space in 2014.
‘The seminar has provided us all with a great insight into what is happening in the prime property market in London and Europe. Many of our guests found the case studies and data profiling buyers , trends and expected trends in values across the very top of the market in Europe especially interesting, particularly as this type of information is not readily available through conventional sources for much of Europe as it is in the UK.’ said Aidan McAvinue, Barclays Wealth.