London - Not Quite What It Used To Be

There is bad news for the central London estate agents enjoying a post-coital cigarette after the orgy of coverage for One Hyde Park: the property swingers have left Blighty, possibly for good, and are now on the other side of the world.

The Candy brothers’ creation is surely the Deep Throat of Property Porn - an instant provocative hit, highly fashionable to support, but destined to look tame very quickly. The same might soon be said of central London’s residential market if research by Savills is indicative of future change.

The agency has compared and contrasted prime central London with prime areas of three other global cities - New York, discussed in this blog last week, Moscow and Hong Kong.

And guess what? Prime London is neither the most expensive nor the location with the strongest recent growth.

Savills uses a ‘basket’ of seven typical properties and says homes at the very top-end of the market - the sort bought by a global CEO, for example - would typically be £6,353 per square foot in Hong Kong and ‘only’ £2,990 in London. For the record, Moscow is £2,574 and New York bottom on £2,365.

Over the past five years this CEO-style property would have risen in value by 47% in London but 148% in Hong Kong.

The shift from London to Hong Kong is not restricted to this uber-top-end world. Savills also looked at the sort of property a management executive would buy - in prime London it would have appreciated 26% in the past five years, but by 92% in HK.

“As short a time ago as 2005 the costs of accommodation in each of the cities looked broadly similar with Moscow a bit of a bargain. By the end of 2010 Hong Kong and Moscow are considerably more expensive than London and New York is the bargain” says Savills.

Some in Britain may want to turn back the clock - even down to wanting traditional accents for estate agents, if recent reports are accurate - but what if the shift of property price growth from London to the likes of Hong Kong heralds a long-term trend?

Interestingly, Savills refers to London and NY as ‘old world’ and Moscow and HK as ‘new world’. Future analysis, which may include the likes of Mumbai and Rio, may also show London ‘strong but fading’ compared to some of India and Brazil.

In property, as in much else, Britain may have to find a new role in a changing world. And that may well be hard to swallow.

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