THE YEAR OF THE SNAKE – a sign of wisdom and insight, heralding a period of rebirth and transformation.

Why we may be heading towards an Inflection Point in the Prime Central London Residential Property Market
In a recent interview, Hugh Obbard shared a comprehensive and insightful analysis of the Prime Central London (PCL) residential property market.
He offered valuable perspectives on trends, challenges, and prospects. Below are the key takeaways:

The Road to Success

Hugh Obbard’s journey in the real estate sector —From Mayfair in the late 1980’s to Chelsea Harbour today, has included working and living in Hong Kong, Indonesia and coming across Donald Trump in New York along the way! — The recent discussion and Q&A provided a broad global perspective on London’s ever-evolving real estate landscape. As the founder of Obbard Ltd 30 years ago, Hugh’s firm is renowned for its focused ‘add value’ approach in the prime London residential market. Specialising in a fully integrated application (drawing on internal skills and experience in each disciple) to buying, selling, letting, asset managing, and refurbishing properties. Obbard Ltd has acted for clients from 41 countries, illustrating its international reach and London’s status as a global real estate hub.
The following highlights several take outs from the session.

Market Trends

• Protectionism & Global Shifts: As global protectionism tightens borders, investors increasingly turn to stable, mature, regulated markets like London, which offers security through its legal framework and global financial connections.
• Middle East & US Investment: The weakened pound makes London particularly attractive for overseas investors, as is notable currently from the Middle East and US.
• Multi-purpose Buildings: A growing demand among Middle Eastern clients is demand for properties that combine residential and family office spaces.
• Global Housing Policy Shifts: With countries from Singapore to Spain tightening foreign buyer regulations, London remains a relatively accessible market for international investors and 2nd home owners.
• UK Government tax changes have precipitated UHNW clients to revisit their London property exposure: Due to the abolition of the Non-Dom regime, some UHNW’s have elected to leave the UK. For some this raises questions on whether to sell or hold existing assets.
• Supply levels of top-quality rental stock is reducing: Following a dramatic take up as we came out of the pandemic and with fewer investor buyers entering the market to replenish stock, many landlords are determining that now is a good time to exploit a strong rental market and upgrade their property to achieve improved returns.
• Tapping value from unmodernised property: As small/medium sized developers have exited the market for the moment, and with buyers showing no appetite to take on complex refurbishment projects, unmodernised property is starting to be heavily discounted.
• Location & Lifestyle: International buyers seek locations that align with their lifestyle and can offer the connectivity to their cultural and social needs. The classification of prime areas, which so often expands in boom times, has retreated to the well-established boroughs of Westminster and Kensington & Chelsea.
• Turnkey Properties: The trend for turnkey properties continues as clients seek homes that reflect living trends today and are presented to the high standards expected, thus clear premiums are achieved on such property.
• Trophy Assets: Strong demand for genuine trophy assets, particularly from Middle Eastern buyers, continues.
• Return to Office Culture: As a clear trend for a return to office policy resumes, demand for properties in well-connected locations is expected to rise, pushing up values for both rents and sales.
• East London: Now well established among young professionals, with excellent connectivity to the city’s tech corridor, financial and legal hubs, East London’s appeal continues to grow.
• Design Trends: We are seeing a clear bias towards personalised interiors. A shift from generic, hotel-like designs to personalised, curated spaces with bespoke furniture, unique antiques, and original artwork.

Investor Insights

• Price Adjustments: PCL property prices are down 15-20% on average from their 2014/15 peak, offering attractive valuations on a comparative basis with other prime markets.
• Strong Rental Growth: Central London gross rental yields have softened to around 4-5%
• Currency Advantage: The pound’s depreciation makes PCL properties more affordable for overseas buyers. In 2014 the dollar was worth 64p, today it is circa 82p.
• Reduced Competition: General sentiment has reduced buyer competition, and above average numbers of sellers is creating favourable conditions for buyers.
• London: Remains the pre-eminent global city, continuing to attract international investors despite the domestic political and economic volatility in recent years. Its world-class institutions and thriving cultural scene ensure it remains a top investment destination.

 

Where the Market is Headed

• Anticipating a return to growth: For global investors a clear sense of opportunity is growing, as base rates fall and sterling bottoms out, we believe the market is reaching an inflection point and a new cycle is imminent. It is possible prices may continue to weaken slightly in 2025. However, looking ahead, the markets anticipate base rates being sub 4% by the end of the year and settling somewhere closer to 3% by late 2026. It’s not hard to see the basis for a recovery and the start of a new cycle therefore within the next 12-18 months.

• Using the advantage : Canny buyers should be looking to exploit this market at its weakest which we feel may be this year. Critical is the quality of the opportunity as more often it is the mediocre or compromised that sees the heavier discounting. Sometimes its only in times like this that best in class can be bought at fair value.

• Optimising an exit: Those in need of an exit need to recognise that buyers have choice and are seeking both value and quality. The art of selling in today’s market is to price well and provide the product the market seeks, which means presentation and standards of finish/modernisation are more critical than ever.

• Holding for the long term: Existing landlords hold a growing advantage, with the issues of critical undersupply unlikely to be addressed within this Government’s life span, competition for best in class rental is going to grow. There is significant opportunity to realise significant uplift on rental incomes for under performing assets.

• Negating high transaction costs: An overseas buyer making a £5-10m purchase would expect to pay around 17-18% in stamp duty. Add on legal costs and survey/valuation the costs are around 20%. Today’s market presents clear opportunities where an unmodernised property could be bought and refurbished resulting in the uplifted value comfortably exceeding both buying and selling costs. Such costs have killed off the individual project developer for now but in mitigating these through refurbishment a private buyer not only negates a huge cost but ends up with a bespoke home designed for them.

This conversation provides invaluable insights into the current state and future potential of the PCL property market. For those looking to enter or expand their portfolio, the message is clear: while caution is warranted, London remains a solid long-term investment destination, offering both wealth preservation and growth potential.

OUR NEWS

Meanwhile we were not so sad to see the back of 2024, a year that was distorted due to the market going into a form of lockdown due to an election being announced in early May and then the wait for the first labour Government budget in nearly 15 years being held at the very end of October. We start 2025 with plenty to do and an eagerness to see what the year brings.

Design & Build

Our design & build arm continues to thrive, with a robust portfolio of projects marking a strong start to the year. Highlights from our current activities across the PCL areas we cover include:
Covent Garden, WC2
Completion this month of a redevelopment project featuring a stunning 2800 sq ft house.
Marylebone, W1
A mixed-use corner block (residential and retail) just a short walk from Marble Arch is set for completion this spring.
Chelsea, SW7
A beautiful 3-bedroom apartment is nearing completion for our long-standing Hong Kong clients.
Knightsbridge, SW7
Works have commenced on an impressive lateral apartment overlooking prestigious communal gardens.
Notting Hill, W11
Renovations are underway for a lateral third-floor apartment, including significant upgrades to the entire building.
South Kensington, SW7
Construction has started on a 4-bedroom family house, designed to be rented upon completion.
Belgravia, SW1
A 3-bedroom apartment renovation is underway in preparation for sale.
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INVESTMENT OPPORTUNITIES

While avoiding overused urgencies like “buy now before it’s too late,” we’re seeing some truly compelling opportunities in the market. Here are a few examples:
• Knightsbridge, SW7 – Probate Sale
o Description: A 2,566 sq ft penthouse with stunning south-facing views and a 25′ x 23′ roof terrace.
o Potential: Create a remarkable 3-bedroom, 3-bathroom, 2-reception apartment.
o Extras: 24-hour porters, access to private communal gardens, next to Hyde Park.
o Guide Price: £4.995m (Target Price: £4.25m–£4.5m)
o Comparable: A similar flat facing Hyde Park is listed at £6.95m.

• Earls Court, SW5 – Off Market
o Description: Two adjacent period houses spanning 15,090 sq ft, fully converted into 14 apartments.
o Mix: 2 x 1-bed, 10 x 2-bed, 2 x 3-bed units.
o Yield: Guide £12.5m (Target £10m, 5% gross yield).
o Strategy: Hold to benefit from the major Earls Court upgrade, then sell as an income-producing asset or break up for strata sale.
• Mayfair, W1 – Off Market
o Description: A 5,260 sq ft period house on a premier Mayfair address.
o Potential: A full renovation project with genuine scope to extend.
o Guide Price: £8.95m (Target £7.75m; £4m for extension/upgrades; End Value: £15m).
• Notting Hill, W2 – Bank Repossession
o Description: A 4,800 sq ft period house with a large garden and off-street parking in prime Notting Hill.
o Potential: Full refurbishment to create a stunning family home.
o Guide Price: £7.5m (Target £6.25m; £1.75m for refurbishment; End Value: £9.5m).
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Travel Plans

We’re planning visits to meet clients, friends, and contacts early this year. If you’d like to schedule a meeting, please let us know.
• Hong Kong: 11th–15th February
• Singapore: 16th–20th February
• Dubai: 11th–14th March