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Home , Bayswater, Bond Street, Leinster Square, Westminster City Council, Whiteleys

2021 Focus on:W2 W2 in focus Park-view premiums Outlook

knightfrank.com/research FOCUS ON: W2 FOCUS ON: W2

NORTHERN PROMISE

by schemes such as One Hyde Park and With easy access into the at from late 2021, the Bordered by , Gardens and , and with One . Kensington and the City via tube, and a short walk spotlight is on W2 now more than ever. significant funding committed to landmark regeneration served by a new Palace Gardens, one of ’s best- from the new Elizabeth Line service Elizabeth Line, W2 is a prime central London neighbourhood to watch. known addresses, lies to the west of the park. Yet W2, the postcode with the MAP 1: AVERAGE SOLD PRICES SURROUNDING HYDE PARK longest park frontage, does not seem to 2020 ituated between the prime Similarly Queensway, an historic have capitalised on this. S residential markets of Kensington, shopping parade that runs through the Our analysis shows that average sales Notting Hill and Marylebone and area as its central spine, has retail units prices in W2 stood at just over £1 million HYDE PARK ESTATE W located on the edge of Hyde Park, W2 with rents at a fraction of prime West End in 2020, some 22% lower than average NOTTING HILL Lancaster occupies an enviable position in prime shopping streets just over a mile away. values in neighbouring Notting Hill, and Gate

central London. However, over the next few years this more than 70% lower than in Kensington Queensway Notting Yet this district, which includes looks set to change. The emergence of a The emergence of a and , the other park- Hill Gate Bayswater, Paddington and Queensway, handful of new landmark developments, “ adjacent neighbourhoods. handful of landmark HYDE PARK has historically been overlooked as well as the wider regeneration of Given the expected increased compared to its neighbours. The presence Queensway, will transform the area with developments as well as emphasis on access to gardens or green

of a mainline rail station at Paddington new homes, hotels, restaurants, retail and the wider regeneration of space post-pandemic from buyers (fig. Hyde Park Corner has, as is often the case, contributed to public spaces. Queensway will transform 1), particularly those in urban settings, KENSINGTON Knightsbridge the fact that many period residential Meanwhile, improving transport links W2 is well positioned to benefit. Indeed, High Street the area. The spotlight is Kensington properties in W2 were converted to hotels at nearby Paddington will make the area Notting Hill and Bayswater have been KNIGHTSBRIDGE

in the last century. even more accessible. on W2 now more than ever among some of the stronger performing LOWER Contain central London markets through the OS data pandemic thanks to a combination of FIG 1. THE GROWING APPEAL OF PARKS AND GREEN SPACES HIGHER When choosing a new home which attributes are most important? good local amenity, access to green

space and walkability. Source: Land Registry/LonRes 62% 51% 43% 40% 40% 31% 30% Outdoor Amenities Access Transport Internet Air Quality Offices within space/ within to quality links connectivity/ the home/ proximity to the home/ healthcare technology development green space development Despite sharing the stucco fronted Victorian part of the Bayswater jigsaw and one that will architecture of Belgravia, facing south onto link the vibrancy of Notting Hill to Marylebone Kensington Gardens and being walking and Mayfair.

Another factor underpinning the distance from Marylebone, Mayfair, Kensington, London has always been an attractive appeal of W2 lies in its relative value given Notting Hill and Knightsbridge, it has always destination for global investors and 25% ALEXANDER LEWIS, been viewed as the good value option. For price growth is forecast over the next five its prime central location (map. 1), as well Knight Frank Residential as its park-side position with south-facing Development Consultancy decades, those in the know have bought in years. Those looking for outperformance will views over Kensington Gardens. Bayswater taking advantage of super-prime be targeting Bayswater. Indeed, W2 remains relatively accommodation for prime prices. This was THE INSIDE VIEW overlooked given that some of London’s largely down to the proliferation of tourist hotels best-known addresses and new The advancement and redefinition of and the absence of any cohesive retail provision. developments surround the perimeter Bayswater has been discussed and Today, the budget hotels are all but of London’s Hyde Park, arguably the tentatively explored for as long as I can gone, converted into luxury apartments. Those looking epicentre of the prime central London remember. It is an area of London that And finally, the much talked of re-imagination “ for outperformance Knight Frank has always championed having and development of Queensway is underway led residential market will be targeting Parkside locations have long been opened its Hyde Park office on Craven by the Queensway Joint Steering Committee. It target locations for developers, evidenced Terrace in 2011. is really happening. This is the linchpin. The final Bayswater

Source: Knight Frank Wealth Report 2021

2 3 FOCUS ON: W2 FOCUS ON: W2

Bayswater. Of the 550 units in the On top of this public realm The overhaul of this historic Victorian ALL CHANGE Bayswater pipeline, 70% are focussed improvement, five key developments mall designed by Foster + Partners is set on Queensway, and have the potential are proposed for the street. Park Modern to complete in 2023. The Whiteley will to re-position Bayswater in line with its (Fenton Whelan/Cheyne Capital), the comprise 1 million square feet of mixed- neighbouring districts. redevelopment of South Queensway use development within a restored Grade (Bourne Capital), a new plaza at Princes II listed building comprising 139 flats, 20 Prime regeneration Court (Bourne Capital), a new retail parade shops and restaurants, a cinema, gym and a W2 is undergoing a significant revival thanks to a strong development at North Queensway (GMS Estates) and Six Senses hotel with 110 rooms. pipeline, which includes a handful of landmark schemes, as well as The evolution of Notting Hill into a the comprehensive redevelopment of The masterplan of the streetscape has the arrival of the Elizabeth Line at nearby Paddington. London district with global appeal has (Finchatton/CC Land/MARK). been designed by Burns and Nice, architects spread to neighbouring Bayswater, notably This group meets as the Queensway Joint behind Exhibition Road and Mount Street along which has been Steering Committee to ensure coordination and will link the separate initiatives. transformed into an eclectic stretch of across their respective schemes. nce the new rail line is fully at Paddington. The area also has buyers, is more prevalent in the new shopping boutiques and restaurants. The south end of Queensway at the operational, the area is expected numerous cycle paths across Hyde Park homes market. O Central to the regeneration of entrance to the park will be bookended by to become one of the capital’s major and Kensington Gardens and is walking Little surprise, then, that development Bayswater will be Queensway with Park Modern, where work is underway to transport hubs with new direct fast links distance from Kensington, Notting Hill, volumes are rising. There are 1,300 units plans underway to turn the street into a construct over 50 apartments overlooking to , the West End, the Marylebone and Mayfair. identified in the pipeline for W2, though destination retail location. At the heart the park, opposite the new entrance to City and Canary Wharf. Consequently, there has always 60% of these are focussed on Paddington Schemes to date of this regeneration lies Kensington Gardens. This project will mark But while improving transport been a strong depth of demand for regeneration typically trading below “ City Council’s regeneration of the the gateway of “Bayswater Village”, the have largely been connections nearby are playing a part in homes in the area, from both domestic £1,500 psf. public areas. This recognises the need name given by small scale period hotel the regeneration story, W2 has always and international buyers and tenants. In Bayswater, with the exception of the to improve the pedestrian experience to the overall initiative, as well as creating been well connected, attracting residents Knight Frank data shows UK buyers Lancasters, schemes to date have largely or office conversions. on Queensway through widening the a new Royal Gateway into Kensington drawn to good housing stock close to have made up more than 70% of the been small scale period hotel or office Park Modern and the pavements, reducing the impact of traffic Gardens working with the Royal Parks. transport hubs. overall sales market in Hyde Park and conversions with a £psqft value of between and improving the public realm through Of the eight retail parades on Whiteley will re-position W2 has five underground stations, Notting Hill over the last five years (fig. £1,750 to £2,000. improved lighting and landscaping. Queensway, five will be comprehensively including a Central Line service into 2), but international demand including However, there is strong pipeline of Bayswater in line with its This will be funded through the S.106 regenerated and re-let, altering the retail the City, and one National Rail service European, Asian, US and Middle Eastern new development now taking place within neighbouring districts contributions of development in the tone of the street. area and includes the creation of a new This regeneration will be book ended gateway into the park. A sum of c.£13m at the north end of the street by the £1.5 FIG 2. WHERE DO BUYERS FIG 3. DIMINISHING PIPELINE OF SUPER-PRIME NEW HOMES has been committed by Westminster City billion redevelopment of Whiteleys, COME FROM? Estimated number of £3,000+ psqft units in London and forecast change Council for these improvements. London’s first . UK .%

EUROPE .% 1,241

ASIA .%

AMERICAS .% 948

690

482 Property matters Post-pandemic optimism 334 289 UHNWIs in the US allocate more of their wealth to property than UHNWIs globally US UHNWIs are more positive about investment opportunities post the pandemic than UHNWIs globally, particularly in relation to technological disruption On average, what proportion of your clients' wealth is directly umber allocated to property? What are the three biggest issues affecting their wealth that will of homes lobal lobal most excite your clients’ in 2021?

-13% lobal London: 201 Annual change ew investment opportunities 24% 18% 25% 21% in a postpandemic world Hong Kong: 165 -24% -27% -30% Technological disruption -31% as an opportunity LA: 155 Principal and second homesProperty investment portfolio AFRICA .%

AUSTRALASIA .% 2021 2022 2023 2024 2025 2026 Cities and resort living shine bright Improving geopolitics 3 New York 115 The appeal of urban and resort living is stronger for US UHNWIs than it is globally lobbal MIDDLE EAST .% Figures are estimated based on the number of super-prime (£3,000+ psft) new homes in the development pipeline ew investment opportunities and forecast sales rates, which are based on historical trends. Due to Covid-19 are your clients more likely to want to buy a house in in a postpandemic world The Whiteley Tax issues Palm Beach: 89 Source: Knight Frank Research Source: Knight Frank Development Consultancy Technological disruption as an opportunity Miami: 87 rexit 3 Improving geopolitics 3 4 33% 75% 455 % 9% Tax issues Opportunities arising from the E agenda Singapore: 85 rexit 3

lobal Opportunities arising Wealth transfer from the E agenda Sydney: 55 to the next generation Wealth transfer 20% 56% 47% 11% to the next generation

City or urban area Resort/coastal area Rural location ki destination Domestic government policy Domestic government policy

Tax is a key motivator US UHNWIs are more motivated by tax as a reason to move than UHNWIs globally, but upgrading the main family residence remains the top motive The main reason for purchasing a new home is... lobal

Upgrading the Tax reasons Downsizing or A new holiday home oving permanently to Education family’s main residence retirement a new country or territory 0 3 0 30 0 3 0 0 0 0 0 0 0 0

Wellness & wellbeing comes first for US wealthy Air quality and access to quality healthcare are more important to US UHNWIs than global UHNWIs When choosing a new home which attributes are most important?

12 3

Access to Outdoor space/ Internet Leisure facilities within Offices within Air quality quality healthcareTransport links nearby access connectivity home or close by home or close by

lobal 75 3

Source: The Wealth Report Attitudes Survey FOCUS ON: W2 FOCUS ON: W2

PARK PREMIUMS RESILIENT RESIDENTIAL

With the pandemic underscoring the value of residential districts close to parks, The London property market in 2020 was shaped by the search for demand for new homes in areas undergoing transformation such as to the north of space and restrictions on international travel. Hyde Park is expected to rise.

iving with green space on your parks, into consideration when deciding can outperform the wider market thanks his played to prime outer London’s prime properties in London fell by 36% have corrected by more than any other L doorstep has always been an where to buy. Just under a third reference to their unique vistas. T strengths and disproportionately due to the pandemic, the number of new UK market over the last five years and this attractive prospect, even more so following air quality as an important feature. The other factor underpinning their curbed demand in some more central prospective buyers registering increased should support growth in the medium term. the experience of the Covid-19 pandemic. Furthermore, our latest residential client desirability is their scarcity. In the last London postcodes. As a result, values in by 109% in the year to January compared Overall, we are forecasting values in Months of being homebound have survey of prospective UK buyers revealed 30 years, only eight schemes have been central London have been in more of a to the previous 12-month period, the prime central London will increase by 25% enhanced people’s desire to for space, that 66% of respondents now view having completed on Hyde Park’s edge. Our holding pattern in recent months, with highest such rise in more than 10 years. between 2021 and 2025, with 2% growth inside as well as out. Accordingly, access access to outdoor space as a higher priority analysis of the development pipeline pricing relatively flat in the early part of In W2, in the market above £5m, this year followed by a 7% rise in 2022 as to green space is the attribute that is rising than before Covid-19. suggests that at present there are less the year. there was a 17% increase in sales in 2020 more of the pent-up demand currently up the wish list of prime residential buyers. Perhaps unsurprisingly, then, our than 60 units available in these schemes On an annual basis, values in central compared with 2019, highlighting its building is displaced into next year (fig. 4). This has been reflected most evidently by research shows that homes adjacent to and that by 2023, there will be fewer than London were 3.5% lower. Most of the continued growth as a prime market. With its pipeline of high-quality the strength of prime regional markets one of London’s Royal Parks can command ten units at any one time. Sydneydecline 55 was recordedSingapore in the 85 early months new residential development, and its across 2020. But also across the London a significant premium.. of the pandemic and average prices have Forecast proximity to Hyde Park, W2 is well market for houses and apartments with That figure stands at 33%, on average, for held up well since the market re-opened positioned. However, this pipeline open space and aspect. a park-adjacent property, while those with a last May. We expect prime London markets will is being depleted over the next five Data from our most recent Attitudes park view can command a greater premium, While travel restrictions have tempered outperform over the course of the next years due to planning restrictions and Survey, as featured in The Wealth Report with a potential 75% average uplift. international demand through 2020, five years. Prices in prime central London underlying land values (fig 3, pg 4).

2021, found that 62% of ultra-high-net- Buyers have always targeted park-facing Miamiactivity 87 is expectedPalm to return Beach 89 quickly once worth individuals (UHNWIs) globally are properties, both as homes in which to live, 75% rules are relaxed, particularly at the top end Average premium for a FIG 4. FIVE-YEAR HOUSE PRICE FORECASTS taking proximity to green spaces, such as as well as investment properties which of the market which has proven resilient property with a direct through 2020. 2021 2022 2023 2024 2025 CUMULATIVE view of one of London’s 2021 TO 2025 Royal Parks Super-prime London Prime Central London 2% 7% 5% 4% 5% 25%

Sydney 115 Shanghai 155 Prime Outer London 4% 4% 4% 4% 5% 23% Nearly $4bn was transacted on super-prime properties ($10m+) in London last year, 4% 4% 3% 3% 3% 18% more than any other city. Moves towards closure on Brexit and the weak pound Source: Knight Frank Research helped the capital leapfrog Hong Kong and New York in the rankings. FIG 5. NUMBER OF SUPER-PRIME $10M+ SALES. 2020 Madrid 165 Dubai 201 The UK capital saw super-prime Sydney Singapore Miami Palm Beach transactions rise by 3%, while Hong Kong and New York saw theirs fall by 27% and 48% respectively. Domestic buyers accounted for a third of all activity in

London’s super-prime market, up from 55 85 87 89 12% a year earlier. European buyers were

also more prevalent due to the relative ease New York Los Angeles Hong Kong London with which they could reach the city. Pricing at this level has also held steady, with an average pound per square foot in the super-prime market of £3,182 in 2020 115 155 165 201 compared to £3,204 in 2019. Furthermore, The view from a terrace at Park Modern, Fenton Whelan while the number of viewings of super- Source: Knight Frank Research

6 7 W2: KEY FIGURES

W8

sold. sold. sold. W2

70% 33% 106% 25% Average values in W2 lie £13M While viewings in the super- Knight Frank forecast for Committed to the public AND 70% below neighbouring prime market fell by 36% price growth in prime central works involved in the W8. Bayswater has over 2020, registrations London over the next five regeneration of Queensway seen piecemeal luxury 75% increased by 106% years. At the same time, by the Knight Frank estimate the development over the highlighting the pent-up the pipeline of new-build average premium for park last 20 years with values demand in the market. super-prime units is forecast adjacent and park view typically £1,750 - £2,250 to decline at an average rate properties respectively. across period and office of 25% per annum. W2 has the longest park conversions, with the frontage of any Central exception of the Lancasters London postcode. and more recently 13-19 .

Front cover image kindly supplied by Fenton Whelan

We like questions, if you’ve got one about our research, or would like some property advice, we would love to hear from you.

Oliver Knight Alexander Lewis Laura Dam Villena Partner and Head Partner Partner and Office Head Residential Development Research Residential Development Knight Frank Hyde Park +44 20 7861 5134 +44 20 7861 5480 +44 20 3978 2463 [email protected] [email protected] [email protected]

Flora Harley Ian Pidgeon Associate Partner Wealth Report Deputy Editor Prime Central London Developments +44 20 7861 1436 +44 20 7861 1302 [email protected] [email protected]

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