Just over a month ago, UK house prices hit a fresh record, driven by a shortage of properties for sale and the trend towards people buying larger, detached homes outside of city centres.
However, there are signs that rising interest rates are beginning to be felt in the housing market and experts predict that the next six months will see a significant slowdown in the market.
With property prices constantly making headlines, we spoke to Sebastien Nicolleau, European real estate expert and founder of Galleon Property Search, about the global property market landscape and where he would invest in 2022.
Sebastien: "In London, since the start of the pandemic, we’ve experienced similar trends to the other European capitals: a domestic demand frenzy of buyers moving to the outskirts of the cities, looking for outdoor space and larger homes (labelled the Working From Home effect). Neighbourhoods in London like Hampstead, St John’s Wood, Wimbledon, Richmond, and Chiswick have been doing very well, with average residential prices up by nearly double digits in some areas.
To the contrary, Prime Central London (PCL) has been struggling. Mainly driven by international buyers, who couldn’t travel since the start of the pandemic, the market has been very subdued in 2020/2021. And this is on the back of four years of Brexit and political uncertainty, which saw PCL residential prices dropping 15% to 20% compared to their peak in 2014. Our expectation was for PCL to bounce back in Q1/Q2 of this year with the return of international buyers. That materialised with the latest figures showing £3 billion was spent on properties worth more than £5mn in H1 2022, 25% higher than H1 2021 and 76% more than in H1 2020. Looking forward, PCL is where most industry experts expect the highest London capital appreciation in the next five years."
"London lost some of its attraction amongst international buyers since the referendum in 2016 and Paris gained as a result. The French capital delivered 25% capital appreciation between 2015 and 2020, while London fell by 17% during that period. The prime segment in central Paris has been very subdued during the lockdown periods (as per Prime Central London) but the market is picking up again with H1 2022 showing a 1% capital value growth.
Paris is high on most international investors’ agendas as it offers comparative value in a global context, with prime property prices at $1,600 per square foot (€15,500 per square metre), 25% less than Geneva and 15% less than London.
GDP in France has returned to pre-pandemic levels, and interest rates remain historically low,9 in line with the European Central Bank (ECB). Unlike the UK, most French mortgages are fixed rate rather than variable, which should encourage further activity within the property market over the coming months. The Grand Paris Express (Europe’s largest public transport project) is due for completion in 2030, and Paris is playing host to the 2024 Olympic Games, both of which are likely to strengthen demand for property."
"Lisbon’s real estate market has been quite healthy in recent years, consistently delivering year-on-year capital growth of 4% to 5%, even reaching 7% in 2021, mainly driven by international buyers and the Golden Visa scheme, which gave anyone access to the Schengen area for a €500k investment in property. However, this international money and price growth priced out local buyers and, as a result, the government decided to end the Golden Visa scheme for Lisbon at the start of this year.
With international demand likely to drop without the Golden Visa incentive, we might well see a residential price adjustment this year. Nevertheless, the city still presents investment opportunity with a weighted rental yield of 2.9%, delivering a growth of 7.6% year-on-year. In the past few years, the rise in tech companies moving into Lisbon has seen the city emerging as a frontrunner of Europe’s buzzing tech scene. With investment from large tech firms growing, Lisbon is set to be a prime destination for international real estate investors and become a major player in the next ten years."
"As the epitome of luxury, the Monegasque property market stood up against the pandemic remarkably well and saw little movement in price, similar to the 2008 economic crisis, despite a slowdown in number of transactions in 2020. You would expect to pay an average price of €52,000 per sq/m, an increase of 75% over the last ten years. With an area of 2.5 square km, the principality is at its full capacity (or nearly). The strength of the market is down to Monaco’s limited stock levels that will ultimately never satisfy the international demand fueled by a very favourable tax regime.
A new waterfront eco-district, Mareterra, due for completion in 2024, will provide 120 new homes which are tipped to be priced at around €100,000 per sq/m. The year-on-year average property price in Monaco was up 9% in 2021, and this market momentum is unlikely to stop any time soon."
"2021 was a record year for prime real estate transactions in the Balearics, with the highest amount of stamp duty in a decade collected in the first six months of the year alone – and it’s the €1 million+ segment driving the market.
Notaries data shows that across all Spanish regions, the Balearic Islands saw the biggest rise in foreign buyers in H2 of 2021. The Balearics saw an 81% YOY increase in the number of transactions made by internationals, much higher than second place Canaries which registered an increase of 57%.
Whilst interest rates in Spain remain at a record low, confidence in the Balearics market is high amongst international buyers. With limited stock due to important planning restrictions and demand growing, we expect to see prices continue on an upward trajectory."
Founded in 2014 by Sebastien Nicolleau, International buying agency Galleon specialises in the search and acquisition of prime and super prime property in the UK, France, Monaco, Spain and Portugal. Working solely and exclusively for the buyers, Galleon represents private clients who are looking to acquire property and manage the entire process on their behalf.
For more information or to get in touch with Seb:
MD & Founder of Galleon Property Search
T: +44 (0) 20 3624 5617 M: +44 (0) 776 882 7957
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