residential where next? London Neil Chegwidden, Residential - PowerPoint PPT Presentation

residential – where next? London Neil Chegwidden, Residential Research, Jones Lang LaSalle

Onions – London’s demand layers

Central London development; areas and price ranges 3

Price growth since credit crisis … Source: Jones Lang LaSalle, Land Registry 8 20 6 15 4 10 % change a quarter % change a year 2 5 0 0 -2 -5 -4 -10 -6 -15 -8 -20 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 CLD quarterly (LHS) CLD annual (RHS) UK annual (RHS)

Currency adjusted Central London development prices Source: Jones Lang LaSalle 120 110 100 90 Index 80 70 60 50 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 Sterling US dollar Euro

2012 Nationality of Central London Buyers* * Jones Lang LaSalle sales only European Other Indian 2% 2% British Turkish 2% 17% 3% Russian 5% Chinese 5% Middle Eastern Singaporean 12% 19% Malaysian 15% Hong Kong 18% Source: Jones Lang LaSalle

UK residential is long-term outperformer! Capital Growth Source: Jones Lang LaSalle, IPD, Nationwide 2,500 UK residential prop = 8.4 % pa 2,000 UK commercial prop = 4.0 % pa Capital value index UK equities = 7.0 % pa 1,500 1,000 500 0 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 Residential property Commercial property Equities

London and prime London even stronger Source: Jones Lang LaSalle, Nationwide 1,500 8.8% pa 1,000 Capital value index 7.7% pa 6.4% pa 500 0 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Prime Central London Greater London UK

Issues … House price bubble? The political football … 9

London’s advantages Language, legal system, track record London’s growth profile Tax efficient investment Expanding population Global financial centre & education hub Restricted supply & availability Safe haven Strong historic performance Wealth preservation Performed better than other assets Destination of choice for many HNWIs Strong capital growth prospects Poor alternative global cities to London Reliable rental returns Growing number of global HNWIs Expanding rental sector

Final thoughts … and consequences • Central London residential will regain / maintain its international appeal • Central London price growth will be strong but not smooth – it is a sensitive market, with no measure of fair value • Outlook will be a battle between stronger economics, high prices and Government / tax interventions • Blurring of boundaries • Price implications for ‘ordinary’ Londoners • Supply constraints