Prime London Central Residential: Is the bubble about to burst?A Presentation by London Central Portfolio, Residential Funds and Asset Managers
The past…the present...
The future?
The elephant in the room
Risk WarningViews and opinions expressed in this presentation are those of London Central Portfolio Limited and do not necessarily represent the views of any third party associates who in no way warrant the accuracy or completeness and accept no liability for any direct or consequential losses arising from its use.
There can be no assurance that current market conditions will remain in the future. Past performance does not guarantee future results. Actual results may differ materially from the forecasts/estimates. Views, opinions, trends and prices expressed are subject to change without prior notice and are expressed solely as a general market commentary and do not constitute investment advice or a guarantee of returns.
Looking at PLC residential as a commercial asset class
Not the UK… 23m residential units
63.2m people
61,840 sq. miles
Average price £238,293
Not Greater London…12.5% UK population
8m people
33 boroughs
Performance closely correlated to the UK
Not... the “East End”, home of the Olympic Village
19,574 Planning permissions. Average price £231,296 11,430 Planning permissions. Average price £370,500
Not...Canary Wharf, home of Multinationals
Average price £1,359,736
378,045 people
5,000 transactions p.a.
It is Prime London Central…the home of...
184,308 units
613 under construction
…It is the “bullseye” of the capital
Made up of numerous ‘villages’ around Hyde Park…
The long term…
Globally desirable
International centre
Highly demanded asset backed investment
Low dependence UK economy Irreplaceable architecture
Go-to destination
London Residential – A Capital Growth AssetPrices have increased over 65 times since 1969
Source: CML, ODPM, OCLG Past performance is not a guide to the future
Cap
ital G
row
th S
ince
196
9
The short term…A robust performer in volatile markets
London Central vs FTSE 100 (Q3 2007 = 100)
A strong story to tell in all market conditions…Performance of gold versus London Central
(1995= 100)
To many foreigners, Central London is ‘cheap’…£ ‘cost’ of Central London property based on different exchange rates
(Oct 2007= 100)
9111
In 2010 HNW population was 10.8m: 2000 buyers for each London property
The scares resource: Volumes fall by 59%…Annual actual transaction volumes from 1996
5365
Current growth is spot on long term trend…London Central actual growth versus long term average growth
(1995= 100)
9% p.a.
Significant Growth ProjectedAnticipated price growth for Prime London Central residential property
Savills (+19%)
JLL (30%)
Knight Frank (+18%)
Source: Jones Lang LaSalle 'On Point', Savills Residential Research, Knight Frank Residential Research
LCP (36%)
Inde
x 2
012
= 10
0
Central London is not just for the globally rich…
Social Housing:25% versus 18%
Empty Homes: 1.4% vs 1.1%
Private Rented Sector: 38% vs 17%
Young, between 25 – 44:40% vs 27%
CosmopolitanNot Born in the UK:53% vs 13%
Second Homes:5.6%
New residential property taxes...
7% for £2m+
15% for £2m+ for certain NNP’s Capital Gains Tax
Annual Tax For Enveloped Dwellings
Carve-outs Good News For Investors …For Now!
But more taxes in pipeline…
GDP in Westminster > any other London borough
£100,000 students at world top universities
Tourism and night time economy: 8bn p.a.
PRS contributes £1.5bn p.a
to economyand £0.5bn to the Exchequer
Global capital – the jewel in the crown
Our 6th biggest “import”
Many drivers for growth in PLC...
Enormous in terms of impact
Tiny in terms of size
Long and short term indicators do not suggest a bubble, but continued buoyancy
Long and short term indicators do not suggest a bubble, but continued buoyancy
