Mayfair and St James's to reclaim throne as London's premier residential districts
An ambitious development pipeline is seeing two of the world's most expensive neighborhoods re-emerge for the 21st century.
Synonymous today with upmarket shopping, prestigious offices and luxury hotels such as the Ritz and the Dorchester, London's elite neighborhoods of Mayfair and St James's are also home to some of the world's most expensive residential addresses.
Long associated with aristocratic housing, and the most expensive squares on the Monopoly board, these affluent districts became increasingly commercialized throughout the 20th century when many historic homes were converted into offices and embassies. Despite high demand from buyers, a lack of new developments in recent years and limited existing prospects have held Mayfair and St James's back from unlocking their residential potential – until now.
A new wave of large-scale developments in prime locations is offering appealing opportunities for domestic and overseas property investors. With sales and rental growth also forecast to accelerate in the next few years, Mayfair and St James's are set to wrestle the crown from Knightsbridge to regain their historical titles as London's pre-eminent residential districts.
Return to residential roots
Like many areas of prime Central London, Mayfair and St James's have a long and storied history that's passed through several notable eras, from the commissioning of St James's Palace by King Henry VIII in the 16th century to the area's emergence as a high-end retail, hotel and diplomatic district following World War II.
With strong demand for large luxury apartments in London outside Knightsbridge, and the general shift in investor demands from commercial assets to residential, this prime real estate is starting to return to its residential roots. Surrounded by parks and with excellent access to Central London amenities and transport links, a statement address in Mayfair and St James's ticks all the boxes for residents and investors alike.
Having weathered the same setbacks as the rest of prime Central London over the last three years, including stamp duty reforms and temporary uncertainty following Brexit, prices in these districts have stabilized over the past 12 months. House prices are expected to grow by a cumulative 9 percent by 2022 and rents by 6 percent over the same period, according to research from Jones Lang LaSalle (JLL).
Property prices in this desirable enclave are already among the most expensive in the UK capital, with even a one-bedroom apartment typically going for between £900,000 and £1.15 million (HKD 9.2m–11.8m) and a two-bedroom flat from £1.75m to £2.0m (HKD 18.0m–20.5m). Weekly rents for these properties range from £500 to £1,300 (HKD 5,100–13,300).
Despite the high financial barrier, Mayfair and St James's property is highly in demand by wealthy investors and residents alike, with several new developments having sold out well in advance of completion through forward purchases. Some prestigious new developments currently in the pipeline are expected to set new benchmarks in excess of £6,000 (HKD 61,600) per square foot.
Meeting investor demands
In recent years, residential stock in Mayfair and St James's was primarily composed of existing properties of 10 units or less, restricting opportunities for large-scale investment. This is about to change, with a number of substantial projects under construction and in the pipeline catering to the high demand for lateral luxury apartments in prime central locations.
This includes two collaborative projects on historic Grosvenor Square converting the old US Navy headquarters on the western side of the square and the Canadian High Commission at MacDonald House back into residential apartments. Once complete, Grosvenor Square is set to become one of the most sought-after addresses in the world.
Five further developments of 25 units or more are currently underway, including 60 Curzon Street and the redevelopment of 22 Hanover Square into luxury apartments and a 50-suite hotel above the new Bond Street Crossrail station. Six more large-scale projects are in the planning stage, which will supply over 200 more units to this formerly undersupplied market.
The transformation of Mayfair and St James's into London's new prime residential neighborhood will be a gradual one, but as gentrification and price growth continue, and exciting new schemes capture headlines worldwide, further development proposals are sure to follow.