RESIDENTIAL RESEARCH
RICHMOND 2014 LONDON MARKET FOCUS
ECONOMIC PARALLELS WITH THE SOUTH-WEST PRICE PREMIUM FOR PRIME CENTRAL LONDON LONDON RIPPLE EFFECT PARK AND BEST VISTAS KEY FINDINGS IN FULL FLOURISH The parallels between Richmond and affluent central Richmond prices rose 10.9% in the year to June 2014 versus London neighbourhoods date back hundreds of years. 8.1% in prime central London Changes in London’s prime residential market since the financial crisis have only strengthened the relationship. A third of sales at Knight Frank’s Richmond office in the six The plaques are located on buildings months to mid-June 2014 were Corridor of affluence lived in by noteworthy figures, which in for above £1,000 per square foot Richmond Park is almost as large Richmond include the playwright Noel compared to less than 10% in the as London’s seven other Royal Coward, the artist Turner and the architect preceding six months Parks combined. Sir Christopher Wren. The 955-hectare conservation area Wren’s most famous creation, St Paul’s Richmond accounted for half in south-west London, on which deer Cathedral, can be seen from Richmond of Knight Frank sales above have grazed for more than 375 years, Park, a view that is London’s longest £10 million in prime outer London represents 49% of the park space in the so-called ‘protected vista’ under local in the year to mid-June 2014 capital owned by The Crown, including planning rules. Furthermore, the view from Hyde Park and Regent’s Park. Richmond Hill across the River Thames is the only vista in the country protected by The average sale price within Richmond’s expansive greenery and an Act of Parliament. 50 metres of Richmond Park’s picturesque river views are the most northern edge was £4.05 million obvious reasons property buyers target In addition to its history and architecture, between January 2011 and March the affluent town of about 22,000 people Richmond has strong socio-economic 2014 versus £1.35 million 50-300 eight miles from the centre of London. parallels with affluent central London areas. metres away But there is sound logic beneath its As figure 5 shows, a series of indicators leafy charms and Richmond has close covering household income, education and Rental values spike near historic, social and economic parallels employment demonstrate how a corridor of Richmond Park and for with central London that drive demand affluence runs through south-west London properties with the best views for prime residential property. from Westminster, through Kensington & Chelsea and Fulham and into Richmond. on Richmond Hill First, its royal history means Richmond’s history and geography mean it Richmond’s housing stock shares combines the verdant English countryside the same grand architecture as many with the grandeur and affluence of prime traditional central London areas like central London. Belgravia and Knightsbridge. The area’s status as a royal residence dates back more than 700 years and was FIGURE 1 cemented at the start of the 16th century Richmond prices outperform prime when King Henry VII built Richmond central London (PCL) and UK Palace. He named it after his ancestral home in Yorkshire and the town that 120 RICHMOND developed around the palace took the PCL UK MAINSTREAM same name. The deer arrived in 1625, 115 when Charles I moved his court there to escape the plague in central London. 110 The result is a predominance of stately Georgian-era architecture for which 105 TOM BILL there is strong demand among buyers. Head of London Residential Research A series of prominent inhabitants 100 underline the area’s notable history. “Richmond’s history and Richmond has the fifth highest number geography mean it combines 95 of blue plaques of London’s 33 J F M A M J J A S O N D J F M A M the verdant English countryside boroughs, a list headed by the central 2013 2014 with the grandeur and affluence districts of Westminster, Camden and Source: Knight Frank Residential Research / of prime central London.” Kensington & Chelsea. Nationwide
2 FIGURE 2 The park premium
AVERAGE PRICE BANDS North Sheen East Sheen £350,000-£750,000
£750,001-£850,000 Roehamption Club
RICHMOND East Sheen £850,001-£1,000,000 Common £1,000,001-£1,250,000
£1,250,001-£1,500,000
Roehampton £1,500,001-£1,750,000
£1,750,001-£2,000,000 Petersham Richmond Park Golf Course £2,000,001-£3,536,708 RICHMOND PARK AVERAGE PRICE BANDS North Sheen East Sheen £350,000-£750,000
£750,001-£850,000 Roehamption Club
RICHMOND East Sheen £850,001-£1,000,000 Isabella Common Plantation Kingston Vale £1,000,001-£1,250,000
£1,250,001-£1,500,000
Roehampton £1,500,001-£1,750,000
£1,750,001-£2,000,000 Petersham Richmond Park Golf Course £2,000,001-£3,536,708 RICHMOND PARK Source: Knight Frank Residential Research / Land Registry
Isabella outlook improved.Plantation It marked the return Demand has grown as buyers from The sales market Kingston Vale of the so-called ripple effect in house areas including Notting Hill, Chelsea and Richmond has benefitted from a price growth, where increases emanate Kensington look further south and west fundamental change in the prime outwards from central London, as has for more space, something Richmond London property market since the global happened in previous property cycles. has in more abundance than most parts financial crisis. of London. As a result, Richmond prices rose 10.9% Prices in prime central London grew 53% in the year to June 2014 compared to Proof of this growing interest is that the between their post-Lehman Brothers low- 1.5% over the preceding 12 months. number of new applicants registering at point in March 2009 and the end of 2012 Knight Frank’s Richmond office was 32% This growth was higher than the increase as turmoil in global financial markets higher in the six months to May 2014 than of 8.1% in prime central London and, as drove international money to London the preceding six-month period. figure 1 shows, Richmond prices have seeking a safe investment. outperformed prime central London and The trend for buyers in London seeking The wave of capital was largely confined the UK mainstream markets since the more square feet for their money is to the boroughs of Westminster and start of 2013. particularly notable in higher price brackets Kensington & Chelsea and Richmond due to strong growth in traditional markets Richmond has also benefitted from rising prices grew 18% over the same period. like Knightsbridge and Belgravia. numbers of buyers seeking the sort That changed at the start of 2013 when of 3,000 square foot-plus homes with Buyers are increasingly prepared to look double-digit growth spread to prime outdoor space have become increasingly further afield for high-value property and outer London as the UK economic difficult to find in central London. in prime central London, 26% of £10
3 RICHMOND 2014 RESIDENTIAL RESEARCH
FIGURE 3 Residential development pipeline in the borough of Richmond
INLAND REVENUE Osterley Status: Application or appeal Private units: 141 Developer: Taylor Wimpey RUGBY FOOTBALL UNION GROUND Status: Full permission Private units: 82 INTERNATIONAL MAIL EXPRESS Developer: Rugby Football Union Status: Full permission Hounslow Private units: 49 Developer: Harepath Properties East Sheen Isleworth RICHMOND POLICE STATION Status: Application or appeal Private units: 20 RICHMOND Developer: Sunley
ROYAL STAR AND GARTER ROYAL MAIL SORTING DEPOT Status: Full permission Status: Full permission Private units: 86 Private units: 99 Developer: London Square Developer: St James Petersham Twickenham TWICKENHAM RAILWAY STATION Status: Full permission Richmond Park SOMERSET HOUSE Private units: 137 Developer: Kier Group Status: Full permission Private units: 30 Developer: Linden Homes TEDDINGTON STUDIOS Status: Application or appeal Private units: 207 Developer: Haymarket Media Group
LATCHMERE HOUSE Teddington Status: Application or appeal Private units: 24 Developer: Berkeley Homes
FORMER NORMANSFIELD HOSPITAL SANDY LANE Status: Full permission Status: Complete Private units: 89 Private units: 123 Developer: Eramo Developments Developer: Linden Homes Source: Knight Frank Residential Research / Molior / EGi
million-plus deals have been done in FIGURE 4 the so-called “golden postcodes” of The Richmond Hill premium Mayfair, Knightsbridge and Belgravia in 2014 compared to 51% last year. £3,500
BEST VIEWS FROM 100 TRAIN STATION RICHMOND HILL
Given its parallels with prime central RICHMOND PARK RENTS PCM 90 London, Richmond is well-placed to ENTRANCE ELEVATION (METRES) benefit as demand for so-called super- £3,000 80 prime property disperses away from the immediate south, east and west 70 ELEVATION (METRES) of Hyde Park. In fact the Knight Frank £2,500 60 Richmond office accounted for half of 50 the £10 million-plus sales in prime outer London in the 12 months to the middle RENTS PCM £2,000 40 of June 2014. 30 Prices have grown more quickly in £1,500 20 Richmond than any other area of south-west London in the first half of 10
2014, Knight Frank sales data shows, £1,000 0 and now regularly exceed £1,000 per square foot. Source: Knight Frank Residential Research / Vizzi Home
4
UK AUSTRALIA RUSSIA US FRANCE BRAZIL GERMANY SWITZERLAND CANADA SPAIN ITALY IRELAND REST RICHMOND 2014 RESIDENTIAL RESEARCH
Of the total number of sales at Knight There is a similar correlation between FIGURE 5 Richmond versus other Frank’s Richmond office, a third were house prices and proximity to the park London boroughs for above £1,000 per square foot in the further south. six months to mid-June 2014 compared The higher prices to the north and to less than 10% in the previous west demonstrate the premium for the six months. Richmond Hill area and its striking views, an effect that is underlined by the rental LOWEST UNEMPLOYMENT RATE (2013) A growing number of international buyers shows demand has broadened as well as value data in figure 4. deepened in Richmond. The percentage Developments include 207 private of UK-based web searches for Richmond units at TeddingtonHIGHEST Studios, MALE the homes has fallen from more than three- redevelopmentEMPLOYMENT of a former RATE police station THIRD HIGHEST TOTAL OF quarters in 2012 to a little over two-thirds and a Royal Mail sorting depot and the GREEN SPACE (2005) in the year to May 2014, as figure 6 shows. conversion of the Grade-II listed Star and Garter building near the entrance to The second and third highest countries Richmond Park. are the US and Germany, underlining the attraction of the area’s international 3RD HIGHEST GROSS ANNUAL PAY (2013) schools (see box on page 6). Lowest rates of (AFTER KENSINGTON AND CHELSEA FIGURE 6 children in care AND WESTMINSTER) As the map on page 4 shows, residential Web users looking at Richmond schemes in the London borough of property by nationality Richmond’s development pipeline tend to be on a smaller scale than prime HIGHEST MALE central London. UK AUSTRALIA RUSSIA EMPLOYMENT RATE (2013) US FRANCE BRAZIL Richmond has the second smallest GERMANY SWITZERLAND CANADA SPAIN ITALY IRELAND pipeline in London after neighbouring REST Kingston, which reduces the risk of oversupply. Richmond town centre in 2014 TO DATE HIGHEST FEMALE LIFE particular has very limited scope for EXPECTANCY (2010-2012) new-build residential property due to the 2013 scarcity of space and conservation rules.
Sale prices are notably higher in the immediate surroundings of Richmond PRIMARY SCHOOLS HAD THE HIGHEST Park, a trend that is particularly marked AVERAGE SCORE IN LONDON FOR to the north-west and south-east, as the ACADEMIC ACHIEVEMENT IN 2012/13 75% map on page 3 shows.
The average sale price within 50 metres of the northern half of the park was £4.05 69% million between January 2011 and March HAS ONE OF LONDON’S FOUR UNESCO WORLD HERITAGE SITES AT KEW GARDENS 2014. That compares to £1.35 million for properties located between 50 and 300 metres away. Source: Knight Frank Residential Research
ONS NVQ4 AND ABOVE LOWEST UNEMPLOYMENT HIGHEST MALE AUSTRALIA RUSSIA ONLY LONDON BOROUGH TO SPAN FIGURE 7 Average asking price for a 4-bed house on the Richmond to Waterloo FRANCE 2ND BEHIND WANDSWORTH RATE IN LONDON EMPLOYMENT RATE BRAZIL BOTH SIDES OF THE RIVER THAMES WITH train line 1km radius from the station SWITZERLAND CANADA 21 MILES OF RIVER FRONTAGE ITALY IRELAND REST £2.5m
UK Richmond LOWEST % OFUS CHILDREN £2.0m LOWEST RATES OF 2ND LOWEST % OF WORKING AGE ON CHILDREN IN CARE BENEFITS AFTER CITY OF LONDONLIVING IN OUT-OF-WORKGERMANY FAMILIES LOWEST AMBULANCE INCIDENTS 2014 TO DATE SPAIN PER 100 POPULATION Barnes Wandworth AUSTRALIA Town FRANCE £1.5m 2013 Queenstown SWITZERLAND Waterloo Strawberry Hill ITALY Putney St Margarets RUSSIA LOWEST % RENTED FROM LOCAL BOTTOMClapham OF “NO QUALIFICATIONS” BRAZIL £1.0m AUTHORITY OR SOCIALNorth HOUSING Sheen Mortlake JunctionLEAGUE VauxhallIN LONDON LOWEST % WITH NO QUALIFICATIONS CANADA Twickenham IRELAND REST Source: Knight Frank Residential Research / £0.5m PRICE Greater London Authority / ONS Source: Knight Frank Residential Research / Vizzi Home
5 GLOBAL BRIEFING For the latest news, views and analysis on the world of prime property, visit KnightFrankblog.com/global-briefing
Richmond is a 19-minute train journey properties with a high-specification finish, to Waterloo station, which is a quicker which is where demand has historically commute than many areas the same been strongest in Richmond. RESIDENTIAL RESEARCH distance from central London. It is a similar Tom Bill Corporate demand in Richmond comes journey time by car to London Heathrow, one Head of London Residential Research from a range of sectors including finance, of the world’s major international airports. +44 20 7861 1492 IT and oil and gas and local employers [email protected] The relatively short commute explains how include BP and PayPal. Tenants are a premium is possible for Richmond houses predominantly British but there is a broad LONDON RESIDENTIAL compared to locations closer to central range of other nationalities including Rupert Dawes London, as figure 7 shows. Japanese, American, German and Dutch. Head of New Homes +44 20 7861 5445 Based on June 2014 asking price data for Corporate lettings are typically between [email protected] four-bedroom houses within a kilometre £4,500 and £5,000 per month but can of each train station, the average price in exceed £12,000 for larger properties. Alex Carr Richmond was £2 million compared to the London Residential Development In a similar way to the sales market, there next-highest figure of £1.58 million in Barnes, +44 20 7861 5444 is a premium in Richmond’s lettings market which is three stops closer to Waterloo. [email protected] for the town’s two main selling points – the park and the view, as figure 4 shows. Luke Ellwood Rentals and investment Head of Richmond Office The data is based on asking prices for +44 20 8939 2801 Prime rents in London are climbing steadily two-bedroom flats in Richmond. It uses a [email protected] as the economy improves and demand from route through the town centre that starts corporate tenants returns. Knight Frank’s on Petersham Road and runs down Tim Hyatt prime south-west London rental index rose Richmond Hill into the centre and ends on Head of Residential Lettings 1.5% in the year to June compared to a Kew Road. +44 20 7861 5044 -0.4% fall in prime central London, though [email protected] Rental yields are typically between 3% the latter figure should turn positive this year and 4%, meaning the total return in the 12 as the recovery continues. months to June was about 14% to 15%, Growth in south-west London is largely which exceeds the prime central London confined to new or newly-refurbished average of 11%.
THE SCHOOL EFFECT The strong reputation of Richmond’s A German school in Petersham and the schools is pivotal for many buyers American International University next to and tenants. Richmond Park are an added attraction Primary schools in the borough of for the growing number of international Knight Frank Residential Research provides Richmond had the highest average score buyers in the areas (see figure 6). strategic advice, consultancy services and in London for academic achievement Knight Frank research shows the forecasting to a wide range of clients worldwide during the 2012/13 academic year, average value of a home within a mile of including developers, investors, funding ahead of Kensington & Chelsea. one the top performing schools in organisations, corporate institutions and the public sector. All our clients recognise the need For secondary schools, five of the top England is 30% higher than average for expert independent advice customised to 30 wards in London for average GCSE values in the surrounding local authority, their specific needs. scores are located in Richmond, out of a a figure that rose from 27% in 2012. total of more than 620 wards.
RECENT MARKET-LEADING RESEARCH PUBLICATIONS © Knight Frank LLP 2014 This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank The Wealth Report Midtown 2014 The London Review Prime Central London LLP is a limited liability partnership registered in England 2014 Spring 2014 Sales Index June 2014 with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list Knight Frank Research Reports are available at KnightFrank.com/Research of members’ names.