The Savills Prime Central London index launched in the late 80s to monitor activity in the top 10 per cent of the market by location, and the market for the capital’s best residential real estate has been expanding and evolving ever since.

Average values of the properties in our index stood at around £176,000 when the index launched and now exceed £4 million.
What we first described as ‘prime’ defined the best property in the best neighbourhoods of core central London.

As such locations have increasingly become the domain of international owners and a store of global wealth, so more central London property and locations have achieved prime status. In the early 80s only certain roads or properties in then fringe central London locations such as Notting Hill were considered prime, but by the late Noughties the bulk of housing stock in the better roads had graduated to ‘prime’ status.

As international equity has colonised portions of Prime Central London, so domestic wealth has been displaced into new areas, extending the boundaries of prime beyond central London. Swathes of south-west London have been gentrified and ‘primed’.
First locations such as Fulham and, more recently, areas such as Clapham and Wandsworth. New developments have often played their part in extending prime boundaries or, as with Wapping and Canary Wharf, created new prime markets. But, without doubt, it is central London that remains core prime.

Central London today

Two boroughs, Kensington and Chelsea and the City of Westminster, contain just 6.3% of London’s housing stock but account for 15.6% of its value. Each hectare of Kensington and Chelsea has on average more than £50 million of housing stock and that despite all the parks and green spaces within the borough.

Other boroughs across Prime Central London do not have the same concentration of high value residential real estate and the depth
of the prime market varies significantly from neighbourhood to neighbourhood.

Within core locations such as Knightsbridge and Belgravia the prime market is at its deepest. Away from these areas the prime market is more diluted, and there is considerable variation in the nature of housing stock.

Different grades of prime have developed which have reacted differently to the volatile market forces of the past six years. In this report we explain how the importance of grade has increased. Growth in Prime Central London values has been significant over the period, even accounting for the downturn of 2008. But our new analysis demonstrates that averages tell only part of the story.

A location-sensitive and property– sensitive ultra prime market has emerged where addresses matter. Certain markets, such as those in Mayfair, have risen rapidly up the rankings in the past six years. Others, such as St John’s Wood, are yet to achieve quite such fashionable status and have seen much lower growth and arguably, therefore, have greater potential for mid-term growth.

Other locations which saw gentrification and associated huge value growth in the 90s, such as Kensington and Holland Park, were less responsive to the growth drivers of 2006/07 than Prime Central London as a whole. Subsequently they were more affected by the downturn and less responsive to recovery drivers.

Against this context we have conducted a detailed review of the composition of our Prime Central London index and the performance of individual properties within it.

This has allowed us to further our understanding of the market and its diversity and nuances. Our findings are detailed in the following pages.

Taken from:
Spotlight: Prime Central London Residential, 2005 to 2011