RESIDENTIAL RESEARCH

RICHMOND 2015 MARKET FOCUS

PARALLELS WITH PRIME THE SOUTH-WEST PRICE PREMIUM FOR CENTRAL LONDON LONDON RIPPLE EFFECT PARK AND HILL VISTAS KEY FINDINGS IN FULL FLOURISH The parallels between Richmond and affluent central Richmond prices rose 15.3% in the two years to June 2015, London neighbourhoods date back hundreds of years. compared to 10.3% in prime Changes in London’s prime residential market in recent central London years have only strengthened the relationship.

In the year to 30 June 2015, the The plaques are located on buildings average price per square foot paid Corridor of affluence lived in by noteworthy figures, which in through Knight Frank’s Richmond is almost as large Richmond include the playwright Noel office was £1,053 compared to as London’s seven other Royal Coward, the artist Turner and the architect £750 in the previous year Parks combined. Sir Christopher Wren. The 955-hectare conservation area in Wren’s most famous creation, St Paul’s Richmond is one of four London south-west London, on which deer have Cathedral, can be seen from Richmond boroughs with less than 1,000 grazed for more than 375 years, represents Park, a view that is London’s longest private units in development, 49% of the park space in the capital so-called ‘protected vista’ under local reducing the oversupply risk owned by The Crown, including Hyde Park planning laws. Furthermore, the view from and Regent’s Park. Richmond Hill across the 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 £2.2 million obvious reasons property buyers target the In addition to its history and architecture, in the three years to 30 June affluent town of about 22,000 people eight Richmond has strong socio-economic 2015 versus £1.4 million 50-300 miles south-west from central London. parallels with affluent central London areas. metres away But there is sound logic beneath its leafy As figure 5 shows, a series of indicators charms and Richmond has close historic, covering household income, education and Prices and rental values spike social and economic parallels with central employment underlines the existence of near Richmond Park and for London that drive demand for prime a corridor of affluence running along the properties with the best views residential property. River Thames through south-west London from Westminster, through Kensington & on Richmond Hill First, its royal history means Chelsea and Fulham and into Richmond. Richmond’s housing stock shares Richmond’s history and geography mean it the same grand architecture as many combines the verdant English countryside traditional central London areas like with the grandeur and affluence of prime Belgravia and Knightsbridge. central London. 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 and UK Palace. He named it after his ancestral home in Yorkshire and the town that 120 RICHMOND developed around the palace took the SOUTH-WEST LONDON same name. The deer arrived in 1625, PRIME CENTRAL LONDON 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 perennial demand among buyers. Head of London Residential Research A series of prominent inhabitants underline the area’s notable history. 100 “Richmond’s history and Richmond has the fifth highest number geography mean it combines of blue plaques of London’s 33 boroughs, 95 the verdant English countryside a list headed by the central districts of 2013 2014 2015 with the grandeur and affluence Westminster, Camden and Kensington Source: Knight Frank Residential Research / of prime central London.” & Chelsea. Nationwide

2 Please refer to the important notice at the end of this report FIGURE 2 The park premium

AVERAGE PRICE BANDS

East Sheen High £350,000-£750,000

£750,001-£850,000 RICHMOND Common £850,001-£1,000,000

£1,000,001-£1,250,000

£1,250,001-£1,500,000

£1,500,001-£1,750,000 Roehampton £1,750,001-£2,000,000

Richmond Park Golf £2,000,001-£3,536,708 Petersham Course Low

RICHMOND PARK

Isabella Plantation ESTIMATED HOUSE PRICES Higher

Lower

The sales market London as the UK economic recovery with outdoor space that have become began to consolidate. This second stage increasingly difficult to find in Richmond has benefitted from the marked the return of the so-called ripple central London. changing nature of demand in the prime effect in house price growth, where London property market over the last six Demand has grown as buyers from increases emanate outwards from central years, a period that can be broken down areas including Notting Hill, Chelsea London, as they had done in previous into three stages. and Kensington look further south and property cycles. During the first stage, prices in prime west for more space, something Richmond central London grew 53% between As a result, Richmond prices rose 10.9% has in more abundance than most parts their post-Lehman Brothers low-point in the year to June 2014 compared to of London. 1.5% over the preceding 12 months. in March 2009 and the end of 2012 as The trend for buyers in London seeking turmoil in global financial markets drove This growth was higher than the increase more square feet for their money is international money to London seeking a of 8.1% in prime central London and, as particularly notable in higher price brackets safe investment. figure 1 shows, Richmond prices have due to such strong growth in traditional The wave of capital was largely confined outperformed prime central London markets like Knightsbridge and Belgravia to the boroughs of Westminster and and the wider prime south-west London between 2009 and 2012. Kensington & Chelsea with Richmond market since 2013. Given its parallels with prime central London, prices growing 18% over the same period. Richmond has also benefitted from Richmond is well-placed to benefit as That changed at the start of 2013 when rising numbers of buyers seeking the demand for higher-value property disperses double-digit growth spread to outer sort of 3,000 square foot-plus homes away from the area surrounding Hyde Park.

3 RICHMOND 2015 RESIDENTIAL RESEARCH

FIGURE 3 Residential development pipeline in the borough of Richmond

TRINITY MEWS Osterley ST MARGARET’S WATERSIDE 37-39 FOOT ROAD Status: Complete & sold Status: Under construction Status: Full permission – not started Private units: 45 Private units: 21 Private units: 20 Developer: Shanly Homes Developer: Mizen Homes Properties Developer: Bandai Namco FORMER RICHMOND POLICE RUGBY FOOTBALL UNION GROUND STATION (8 RED LION STREET) Status: Full permission – not started Status: Under construction Private units: 82 Private units: 19 Developer: Rugby Union Partnership Developer: Sunley Group

Hounslow East Sheen BREWERY WHARF Isleworth Status: Under construction Private units: 99 Developer: St James

RICHMOND RAILWAY STATION Status: Full permission – not started Private units: 115 159 HEATH ROAD Developer: Solum Regeneration Status: Full permission - not started Private units: 15 THE STAR AND GARTER Developer: Axiom Land Status: Under construction Petersham Private units: 86 Twickenham Developer: London Square Richmond Park 69 LONDON ROAD Status: Under construction Private units: 41 WALLIS MEWS Developer: Raphael Freshwater Status: Complete & sold Memorial Association Private units: 30 Developer: Linden Homes RIVERSIDE Status: Full permission – not started Private units: 207 Developer: City Developments Teddington LATCHMERE HOUSE Status: Full permission – not started Private units: 60 Developer: Berkeley Group 38-42 HAMPTON ROAD LONDON SQUARE TEDDINGTON Status: Full permission – not started Private units: 35 Status: Under construction Developer: Byrne Group Source: Knight Frank Residential Research / Molior / EGi Private units: 26 Developer: London Square

Indeed, Knight Frank data shows that in FIGURE 4 the year to 30 June 2015, the average The Richmond Hill premium price per sq ft in Richmond was £1,053 Rental values for two-bedroom flats compared to £750 in the previous year. £3,500

BEST VIEWS FROM 100 TRAIN STATION RICHMOND HILL

A growing number of international RICHMOND PARK RENTS PCM 90 buyers shows demand has broadened ENTRANCE ELEVATION (METRES) as well as deepened in Richmond. £3,000 80 The percentage of UK buyers remains

70 ELEVATION (METRES) high but has edged down in recent years, as figure 6 shows. £2,500 60

The third and most recent stage in the 50

history of the London property market RENTS PCM £2,000 40 has been marked by a greater degree of 30 regulatory and political uncertainty. £1,500 20 Price growth across London slowed in the months before the general 10 election in May 2015 due to the £1,000 0 prospect of a ‘mansion tax’ and wider political uncertainty. Source: Knight Frank Residential Research / Vizzi Home (2014)

4

UK AUSTRALIA RUSSIA US FRANCE BRAZIL GERMANY SWITZERLAND CANADA SPAIN ITALY IRELAND REST RICHMOND 2015 RESIDENTIAL RESEARCH

Furthermore, a series of tax changes in and Garter building near the entrance to FIGURE 5 How Richmond compares among recent years, including a rise in stamp duty Richmond Park. for properties worth more than £1.1 million London’s 32 boroughs Sale prices are notably higher in the in December 2014, has dampened activity. immediate surroundings of Richmond However, the effects of these changes Park, a trend that is particularly marked to have been less marked in areas like the north-west and south-east, as the map in figure 2 shows. PRIMARY SCHOOLS HAD HIGHEST Richmond because they do not follow the sort of exceptional and prolonged period of AVERAGE SCORE FOR ACADEMIC The average sale price within 50 metres ACHIEVEMENT (2013/14) house price growth that took place in prime of the northern half of the park was £2.2 central London following the financial crisis. million in the three years to 30 June 2015. That is 57% HIGHESThigher than MALE the average of Today, the market is benefitting from its EMPLOYMENT RATE relative affordability versus prime central £1.4 million for properties located between FOURTH HIGHEST EMPLOYMENT RATE (2014) London, which is driving growing 50 and 300 metres away. numbers of buyers to Richmond and There is a similar correlation between south-west London. house prices and proximity to the park Higher stamp duty is a factor in decision- further south. 3RD HIGHEST GROSS ANNUAL PAY (2014) (AFTER KENSINGTON AND CHELSEA making and means some buyers have Lowest rates of AND WESTMINSTER) become more selective and price-sensitive children in care FIGURE 6 with an increasing focus on the most prime Buyer nationality in Richmond areas and property types.

As the map in figure 3 shows, residential UK FRANCE GERMANY UK AUSTRALIA RUSSIA SINGAPORE SOUTH AFRICA SRI LANKA US FRANCE BRAZIL THIRD HIGHEST LIFE schemes in the London borough of CHINA INDIA RUSSIA GERMANY SWITZERLAND CANADA SATISFACTION SCORE (2013/14) Richmond’s development pipeline tend US UAE IRELAND SPAIN ITALY IRELAND NEW ZEALAND SWITZERLAND BRAZIL REST to be on a smaller scale than prime AUSTRALIA QATAR MALAYSIA central London. SWEDEN 2014 TO DATE Richmond is one of only four London Two years to THIRD HIGHEST PERCENTAGE OF boroughs to have less than 1,000 private 30 June 2015 2013 WORKING AGE POPULATION WITH units in the development pipeline. It has A DEGREE OR ABOVE (2014) Two years to the third lowest number of units with 30 June 2013 planning£2.5m permission or under construction, reducing the risk of oversupply. Richmond town centre in particular has very Richmond SECOND HIGHEST PERCENTAGE OF limited£2.0m scope for new-build residential 75% CHILDREN TO ACHIEVE 5 GCSES AT property due to the scarcity of space and 82% A* TO C INCLUDING ENGLISH AND MATHS Barnes Wandsworth conservation rules. Town Queenstown £1.5m Road Waterloo DevelopmentsStrawberry include Hill 207 private units at 69% Putney St Margarets Teddington Riverside, the redevelopment 69% Clapham £1.0m Junction Vauxhall of a former police station andNorth a Royal Sheen HAS ONE OF LONDON’S FOUR UNESCO Twickenham WORLD HERITAGE SITES AT Mail sorting depot at Brewery Wharf and the£0.5m conversion of the Grade-II listed Star Source: Knight Frank Residential ResearchPRICE

AUSTRALIA RUSSIA FIGURE 7 FRANCE BRAZIL LOWEST UNEMPLOYMENT HIGHEST MALE Average askingONS priceNVQ4 ANDfor a ABOVE 4-bed house on the Richmond to Waterloo train line SWITZERLAND CANADA ONLY LONDON BOROUGH TO SPAN 2ND BEHIND WANDSWORTH RATE IN LONDON EMPLOYMENT RATE ITALY IRELAND BOTH SIDES OF THE RIVER THAMES WITH 1km radius from the station REST 21 MILES OF RIVER FRONTAGE £2.5m UK Richmond US GERMANY 2014 TO DATE LOWEST % OF CHILDREN £2.0m LOWESTQueenstown RATES OF 2ND LOWEST % OF WORKING AGE ON SPAIN Road Wandsworth AUSTRALIA Waterloo CHILDREN IN CARE TownBENEFITS AFTER CITY OF LONDONLIVING IN OUT-OF-WORK FAMILIES FRANCE LOWEST AMBULANCE INCIDENTS 2013 SWITZERLAND PER 100 POPULATION Barnes £1.5m Mortlake ITALY Vauxhall RUSSIA North StrawberryBRAZIL Putney Clapham Sheen CANAHill DA LOWEST % RENTEDJunction FROM LOCAL BOTTOM OF “NO QUALIFICATIONS” St Margrets £1.0m AUTHORITY OR SOCIAL HOUSING LEAGUE IN LONDONIRELAND LOWEST % WITH NO QUALIFICATIONS REST Twickenham

Source: Knight Frank Residential Research / £0.5m PRICE Greater London Authority / ONS Source: Knight Frank Residential Research

5 GLOBAL BRIEFING For the latest news, views and analysis on the world of prime property, visit KnightFrankblog.com/global-briefing

The higher prices to the north and west and London’s status as a global financial demonstrate the premium for the Richmond centre consolidates. Annual rental value RESIDENTIAL RESEARCH Hill area and its striking views, an effect that growth in Richmond has been broadly flat Tom Bill is underlined by rental value data in figure 4. over the last 12 months and rental yields are Head of London Residential Research +44 20 7861 1492 typically between 3% and 4%, which Richmond is a 19-minute train journey [email protected] is higher than prime central London. to Waterloo station, which is a quicker commute than many areas the same Growth in south-west London is LONDON RESIDENTIAL distance from central London. It is a predominantly confined to new or newly- Rupert Dawes similar journey time by car to London refurbished properties with a high- Head of New Homes Heathrow, one of the world’s major specification finish, which is where demand +44 20 7861 5445 [email protected] international airports. has historically been strongest in Richmond. Alex Carr The relatively short commute contributes Corporate demand comes from a range of London Residential Development to the premium that exists for Richmond sectors including finance, IT and oil and gas +44 20 7861 5444 houses compared to locations closer to and local employers include BP and PayPal. [email protected] central London, as figure 7 shows. Tenants are predominantly British but Luke Ellwood Based on asking price data for four- there is a broad range of other nationalities Head of Richmond Office bedroom houses within a kilometre of each including Japanese, American, German +44 20 8939 2801 train station, the average price in Richmond and Dutch. [email protected] was £2.13 million compared to the next- Corporate lettings are typically between Tim Hyatt highest figure of £1.8 million in Queenstown £4,500 and £5,000 per month but can Head of Residential Lettings Road, seven stops closer to Waterloo. exceed £12,000 for larger properties. +44 20 7861 5044 [email protected] In a similar way to the sales market, there Rentals and investment is a premium in Richmond’s lettings market Prime rents in London are climbing steadily for the town’s two main selling points – the as the economic recovery takes hold, park and the view, as rental data for two- demand from corporate tenants improves bedroom flats in figure 4 shows.

THE EDUCATION EFFECT

The strong reputation of Richmond’s to Richmond Park are an added schools is pivotal for many buyers attraction for the growing number and tenants. of international buyers in the areas Primary schools in the borough of (see figure 6). Richmond had the highest average score Knight Frank research shows the in London for academic achievement average value of a home within a mile during the 2013/14 academic year, of one the top 50 best performing ahead of Kensington & Chelsea. schools in is 16.6% higher Important Notice A German school in Petersham and the than average values in the surrounding © Knight Frank LLP 2015 – This report is American International University next Local Authority. 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 RECENT MARKET-LEADING RESEARCH PUBLICATIONS responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH PRIME CENTRAL LONDON SALES INDEX or reference to the contents of this document. STAMP DUTY CHANGES DAMPEN ACTIVITY IN PRIME CENTRAL LONDON LONDON As a general report, this material does not Subdued activity levels in prime central London are likely to continue RESIDENTIAL until the autumn as buyers and sellers digest recent tax changes, says SOUTH-WEST Tom Bill In the period between the general election Indicative figures for housing transactions in REVIEW JULY 2015 and the summer holiday, buyers in London England and Wales for the first quarter of 2015 have taken stock of new market conditions show the extent to which high-value property necessarily represent the view of Knight Frank THE GENERAL ELECTION AND Annual growth was flat at 2%, down from LONDON 2015 and appear less inclined to rush into making 7.9% in July 2014 transactions in London make a growing LONDON MARKET FOCUS THE PRIME LONDON MARKET decisions. contribution to stamp duty revenues, in contrast to the volume of deals. A succession of tax changes has contributed SPRING 2015 December’s rise in stamp duty for towards low single-digit annual growth, meaning properties worth more than £1.1 million Although London accounted for 13% of buyers and sellers are more prepared to sit appears to have contributed to more transactions in the first quarter of this year, it on the sidelines until later this year, unafraid of subdued activity contributed 46.9% of stamp duty revenue, up missing out on the imminent return of stronger LLP in relation to particular properties or from 43.4% in the same period in 2014 under the growth. old stamp duty system. Meanwhile, properties London accounted for 13% of Following a general election and a Budget worth in excess of £1 million in London accounted transactions across England & Wales that contained a degree of focus on the prime for 1% of deals in England and Wales but the in the first quarter of this year, but London property market, more discretionary revenue contribution has increased to 25.8% from contributed 46.9% of stamp duty buyers are waiting to see how readily recent 19.8% last year. revenue policy changes will be absorbed. Overall stamp duty in England and Wales is down projects. Reproduction of this report in whole While there seems to be some short-term in the first quarter, as the government predicted, £1 million-plus London properties hesitation around recent alterations to non-dom though it expects house price inflation to help accounted for 1% of sales but 25.8% legislation, it is December’s rise in stamp duty make up any short fall in coming years. of stamp duty revenue in Q1 2015 which appears to have had the single biggest However, after 12 months of successive declines, dampening effect on demand as buyers digest annual price growth in prime central London the reforms. New monthly Macro View section: flattened out at 2% in July, down from 7.9% in The impact of the impending interest rate Despite the strong underlying economy, the the same month last year. Furthermore, while total or in part is not allowed without prior written rise and Chinese stock market volatility number of tax changes, which have a particularly sales volumes in England and Wales fell 11%, the strong impact on London, means the market is number of £2 million-plus deals in London was undergoing a period of readjustment. down by 25% in the first quarter of 2015.

FIGURE 1 FIGURE 2 Price growth in prime central London The growing contribution of prime London flattens out % of total stamp duty revenue and transactions approval of Knight Frank LLP to the form 9% Annual growth Revenue 8% Six-month growth Quarterly growth

47% London 7% Monthly growth £1m+ TOM BILL 6% 43% London £1m+ Head of London Residential Research London £2m+ 5% 34% London £5m+ 4% 26%

“December’s rise in stamp duty 26% 3% and content within which it appears. Knight appears to have had the single

2% 20%

biggest dampening effect on 6%

1% 3% 15% Q1 2015

demand” Q1 2014 0% 12% Follow Tom at @TomBill_KF -1% Transactions Q1 2015 For the latest news, views and analysis PRICE PERFORMANCE THE RESURGENT 1.5% 1% 0.2% 0.04% Jul-14 Jul-15 13% Apr-15 Oct-14 Jan-15 Jun-15 Mar-15 Feb-15 Aug-14 Sep-14 Dec-14 POST-ELECTION ANALYSIS Nov-14 MAP OF LONDON RENTAL MARKET on the world of prime property, visit May-15 MIGRATION OF BUYERS HOUSEHOLD INCOME PRICE PERFORMANCE AND Global Briefing or @kfglobalbrief Frank LLP is a limited liability partnership FROM CENTRAL LONDON MAP OF LONDON VALUES PER SQUARE FOOT Source: Knight Frank Residential Research Source: Knight Frank Residential Research registered in England with registered number The Wealth Report South West London London Residential Prime Central London 2015 - 2015 Review - Spring 2015 Sales Index - July 2015 OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may Knight Frank Research Reports are available at KnightFrank.com/Research look at a list of members’ names.