The number of London apartment buildings with lifestyle facilities that rival four- and five-star hotels has risen dramatically over the last 10 years.
From their original heartland in Knightsbridge, these luxury buildings have expanded their presence across Central London. In the eight inner-most districts there are now 38 buildings providing some 4,000 hotel-style apartments.
Developers seeking record-breaking prices are delivering exceptional levels of luxury and service. This luxury apartment market has the potential to provide serious competition for the serviced flat and hotel sectors. These are just some of the findings of a new report from leading estate agent Kay & Co.
The ‘New Apartment Buildings Rival Luxury Hotels’ report was commissioned by Kay & Co with data analysis undertaken by Dataloft, the market intelligence group. It used Land Registry, Kay & Co data and local market intelligence to analyse more than 4,000 prestige apartments built in Prime Central London over the last decade.
In order to quantify this market the report devised a hotel-style star-rating system for the new PCL developments. Ten lifestyle criteria were used to award points to developments based upon the presence of certain features and amenities. The star-rating criteria had a maximum of 50 points.
A one-star development scored under five points and provided a concierge and good local amenities. A two-star scored between five and 14 points and benefited from a concierge, parking and local amenities. A three-star scored between 15 and 24 points with concierge, outside space and local amenities. A four-star scored between 25 and 34 points providing concierge, outside space, local amenities, gym/spa and/or business suite. A five-star scored between 35-50 points providing concierge, outside space, gym/spa, cinema, wine cellar and swimming pool. The report mapped 38 developments: 10 were allocated five stars; nine were given four stars; 10 had three stars; seven achieved two stars and two got just one star.
The four- and five-star developments were historically clustered in Knightsbridge, then expanded into Mayfair and Belgravia. However in recent years developers have delivered ultra-prime products in Fitzrovia, Westminster, Bayswater, Marylebone and the Hyde Park Estate. The number of four- and five-star rated developments has risen dramatically.
There are now 1,083 5-star rated apartments in London with a combined value of more than £2.4 billion. The proportion of apartments achieving these top grades has risen steeply in the last 18 months from 60 percent to 74 percent of all new PCL developments. More five-star apartments are due to be completed in 2015 and 2016 than in the 10 previous years combined.
The report highligheds that the focus of luxury pipeline development is along the Northern and Western boundaries of London’s West End. Some 81 percent of allfive5-star apartments scheduled for completion in 2015 and 2016 are in Fitrovia or Marylebone, and some of the most recent luxury projects unveiled or in the pipeline are in the Hyde Park Estate and Bayswater.
An analysis of London’s top-10 five-star developments also underlined the expansion of the hotel-style apartment concept outside of its historic Knightsbridge heartland. Whilst, perhaps unsurprisingly, the report’s top two developments with the highest amenity scores are One Hyde Park and The Knightsbridge, other projects in the top-10 include The Chilterns and Chiltern Place, both in Marylebone; Riverwalk in Westminster; and Rathbone Square and Fitzroy Place, both in Fitzrovia.
The report also revealed there has been a significant lack of new luxury apartment development in Chelsea and Kensington. Of the 38 developments reviewed in the report, only two are in Chelsea proper, with two – Chelsea Barracks and Grosvenor Waterside – being on the border with Pimlico. There is also an emerging “North-South divide” across central London in terms of types of apartment offering. To the South, there is a swathe of one-, two- and three-star apartment buildings running parallel to the river from Chelsea to Westminster. To the North there is an arc of four- and five–star buildings running from Knightsbridge, via Bayswater and the Hyde Park Estate, to Marylebone and Fitzrovia.
The presence of Royal Parks near to five-star rated apartment buildings is notable. Of the ten developments rated five-star in the report, eight are in the vicinity of either The Regent’s Park or Hyde Park. The south of Hyde Park is home to a cluster of five star developments such as The Knightsbridge, Lancelot Place and One Hyde Park whilst the popularity of Fitzrovia, the Hyde Park Estate and Marylebone may, in part, be attributed to their easy access to parkland.
The report highlighted the rise in global wealth has resulted in a demand for lateral apartments with hotel style facilities by international investors from the Middle East, Asia and Africa. Many wealthy overseas buyers are used to hotel style apartments in their domestic countries and want to acquire the same product in London. The success of projects such as The Knightsbridge and One Hyde Park has encouraged developers to stretch the boundaries of specification, amenities and pricing to offer not just a home but a lifestyle.
As a result, prices paid for new build apartments in central London has increased at an astonishing rate. The average price of a hotel-style apartment in PCL has risen 341 percent from £511,000 in 2009 to £2.25 million in 2014-15. New apartments with hotel type amenities now sell at a 62 percent price premium compared to second-hand conventional apartments.
Three key conclusions can be drawn from the report. Firstly, this new generation of luxury apartments has the potential to cut across the serviced apartment and traditional hotel sectors. Over the last few years global economic turbulence has driven some ultra-high-net-worth investors to mortgage their luxury four- and five-star rated apartments, release cash from them, and place them on the rental market in order to generate income. This has the potential to compete with the existing serviced apartment and luxury hotel markets.
Secondly, these new apartments are creating a new style of city living, where residents have access to concierge facilities, gyms, swimming pools, spas, retail outlets, in-room dining and valet parking. Thirdly, success is driving expansion of these projects into new areas to the North of London’s West End creating a new prime London region. Over the next five years we can expect to see more three-, four- and five-star rated projects in Euston, Kings Cross and Paddington.
Martin Bikhit, Managing Director of Kay & Co, said: “Go back a decade and there were around half a dozen luxury apartment buildings with hotel style amenities most associated with Knightsbridge. Now global demand, rising prices and excellent developer standards have resulted in a huge expansion of this hotel style apartment offering.
“There are now some 4,000 of these apartments, 1,083 five-star rated, located across eight Central London districts. A key trend has been an emergence of these projects to the North of the West End in locations including Marylebone, the Hyde Park Estate, Bayswater and Fitzrovia. This is in the heart of our operating area.
“Over the next five years we can expect to see more three-, four- and five-star rated projects in locations including Euston, Kings Cross and Paddington. A new prime London region is emerging.”
