The sales market

The outlook for Mayfair and St James’s needs to be considered in the context of the wider prime London market.

A decisive election was expected to boost confidence in the prime London market, but it still remains relatively price sensitive, particularly at the top end. This reflects the increased transaction costs resulting from successive reforms of stamp duty, and in the more domestic markets, the ongoing impact of increased mortgage regulation. We expect this to lead to muted price growth in the short term as the market adjusts to a new fiscal and regulatory backdrop.

Mayfair and St. James’s are two of the highest value locations within central London and therefore the new rates of stamp duty are having an impact on the top end of the market with demand currently concentrated at the lower price points. However, over the medium term, we expect the fundamentals of wealth generation will support medium term price growth and demand for higher value properties will return.

The arrival of Crossrail combined with the ongoing improvements to the public realm, retail and leisure offering that are being carried out by the large estates will continue to attract both domestic and international demand to the area.

The rental market

Over the next five years the London economy is forecast to continue strengthening, which will underpin demand for prime rental property over the medium term as more people move to London for employment opportunities.

In the borough of Westminster, the economic output is anticipated to increase by 19% over the next five years and 40% over the next 10 years. Both Mayfair and St. James’s are key employment locations within the borough, as well as prime areas to live, making them a popular choice for corporate tenants. As businesses expand, these locations are well placed to attract both new tenants and investors.

A potential risk to the sector is the high level of stock coming to the market from both new build properties bought by investors on the fringes of prime central London and accidental landlords who are delaying a sale of their property until the market adjusts to the new rates of stamp duty.