Prime Central London: a resilient investment
The Prime Central London property market attracts investors from across the globe looking for coveted real estate in one of the most exciting cities in the world.
Article originally published in MoneyWeek on 3rd January 2023.
London is a magnetic and magnificent metropolis. The Prime Central London (PCL) market attracts investors from across the globe looking for coveted real estate in one of the most exciting cities in the world. The best in every category – including location, finish, and desirability – prime London property is the crown jewel of the UK’s housing stock.
With a myriad of benefits attracting buyers to the PCL market, such as London’s unrivalled cultural appeal or its continuing position as a global financial superpower, it’s no surprise that prime properties have seen house price growth in recent years despite the political and economic turbulence. Indeed, according to Savills’ July report, annual growth for prime prices totalled 3.3%, the strongest level seen since September 2014. Pockets within PCL have performed even better – prices for prime pads in Notting Hill, for example, shot up by 10% from March 2020 to the end of June 2022.
The ebbs and flows of the PCL market
While PCL is undeniably esteemed for its prestige, it is the sector’s resilience that proves increasingly valuable to investors, especially in the current climate. According to the latest Savills research, following every economic downturn over the last 50 years, PCL prices have significantly and consistently bounced back faster than the wider London or UK property markets. The data from Savills also highlights this during more recent downturns, with transactions rocketing by 48% between H1 2019 and H1 2022. In contrast, property transactions in the UK as a whole grew by just 9% in the same period.
The financial resilience of those operating in the PCL market is of course a huge asset. Players in this space can more readily withstand financial shocks. Recently, this was seen in the aftermath of the UK’s first lockdown during the Covid-19 pandemic. While the lockdown of March 2020 hit all subsections of the property market, PCL surpassed its March transaction volumes in just four months (+6%).
Uma Rajah, CEO and co-founder of CapitalRise, the prime property lender, explains: “When we launched our investment platform for Prime Central London, the market was in decline. But our deep expertise in this specialist area means we understand the market well and appreciate its resilience in uncertain times, allowing us to continue to offer investment opportunities. In addition, our responsible approach to projects means we see the current market as a time of great opportunity for us and our investors.”
The CapitalRise story
CapitalRise is a specialist prime property finance company and the only dedicated finance provider for such developments in London and the Home Counties. It offers investment opportunities in real estate across prime London locations including Mayfair, Notting Hill, Belgravia, Chelsea, and Knightsbridge, as well as Outer London and the Home Counties.
CapitalRise was set up with a clear mission: to disrupt the old way of investing and give investors direct access to these prime property-backed investing opportunities, with tax-free returns available through their Innovate Finance ISA. With a team of in-house experts with over 100 years’ combined experience and a stringent due diligence process, CapitalRise offers its members the opportunity to view and invest in a range of property developments in the PCL market.
Since its launch in 2016, CapitalRise has originated loans secured against nearly £700m of prime property assets, funded by its network of individual and institutional investors. Despite the current market upheaval, its investment platform saw a record month in November this year, with the value of new funds invested increasing by 30% on the previous 2022 monthly average. Innovative Finance ISA ‘transfer in’ volumes also tripled during the same period.
Uma Rajah, CEO and co-founder of CapitalRise continues: “To demonstrate its confidence in every project that it commissions, CapitalRise’s founders personally invest their own capital into all projects on its platform. By choosing investment opportunities prudently and working with high-quality borrowers on great schemes in desirable areas, we have grown the business considerably and repaid over £110 million to our investors with zero investment defaults or losses.”