Time for a Knightsbridge revival?

By Patrick Alvarado, director of Nicolas Van Patrick

It is never wise to consider the housing market as a uniform whole as not every area ‘performs’ as well as the next. Knightsbridge is a prime example; while it has been well documented that the housing market has thrived over the past 18 months/two years, Knightsbridge has lagged behind its prime central London neighbours. Meanwhile, Kensington & Chelsea has seen a stellar rise in values, with its property market outperforming Knightsbridge as it is mainly driven by domestic buyers and international-domestic buyers who have made London their home.

Knightsbridge hasn’t witnessed the same level of recovery in sales and values as RKBC because it is more reliant on international buyers. While the £5m-plus market is reportedly strong in PCL, when you drill down, it’s not surprising to find that many of those sales took place in RKBC. Travel restrictions mean that the mainland Chinese who love Knightsbridge so much are still not back in town, while the Middle Eastern buyers are to a degree but perhaps not as many as one would usually expect.

However, the main issue facing non-resident international buyers, more so than Covid, the conflict in Ukraine or Brexit, is taxation. It has totally changed our market as those buying property in the UK find the taxation extremely onerous; global travellers have plenty of choice and don’t have to buy here. If you are an international buyer looking for a decent return on your investment, PCL doesn’t give you that; other European cities do it better. However, London remains the place where people often choose to park their money because it is regarded as a safe environment, as well as having plenty to offer in terms of quality of life.

Mayfair and RKBC have fared so much better than Knightsbridge because they do a better job at appealing to the domestic and international-domestic market. Both benefit from over-arching landlords who invest in significant regeneration projects, with the Grosvenor Estate behind Mount Street, Elizabeth Street and Motcomb Street, and the Cadogan Estate’s investment in Duke of York Square, and more recently the redevelopment of Pavilion Road. This isn’t replicated in Knightsbridge, although we are pleased to note that some of the intensive heavy construction work which has gone on for some years is finally coming to an end. Key developments such as the Peninsula hotel at Hyde Park Corner, the high-end residential developments in Parkside and the regeneration of Lowndes Square with the Chelsfield development, are all welcome.

While Knightsbridge may lag RKBC in terms of price growth, the flip side is that on paper it represents pretty good value compared with other parts of PCL, particularly when you consider its geographical position. A house in Knightsbridge has plenty to recommend it – beautiful garden squares, Hyde Park, St James’s and plenty of fantastic shopping.

When it comes to pricing, the market is undoubtedly shifting; we are telling clients that it is not as much a seller’s market as it has been so if they are serious about transacting, they need to be realistic on price. The Knightsbridge market is extremely price sensitive with best-in-class commanding a premium while everything else needs to be as close to the ‘true’ price as possible. It is important to get the pricing right when launching a property as the window of opportunity is short; we are already halfway through June and the market is increasingly moving towards a buyer’s market.

That said, there are plenty of reasons to be cheerful about Knightsbridge’s prospects, particularly when it comes to the rental market. Underpinned by a lack of supply, the rental market has improved enormously since the days of Covid. Rents have hardened while yields have improved substantially, and tenants are embarking on longer tenancies which is good news for our landlords.

We have seen more deals agreed in the past month than we have in a while, on both the sales and rental side, and when the last of the travel restrictions are removed, we believe the Knightsbridge market will fare even better.