A leading lettings director has claimed that developers of prime London locations could be considering downsizing apartments that are struggling to sell.
Marc von Grundherr, director at Benham & Reeves Residential Lettings in London, feels that downsizing these types of property make them more appealing to buy-to-let investors.
Research
Mr von Grundherr said recent research shows that there are more luxury flats being built in London than have been sold previously. Developers across the capital are now re-examining the latter stages of schemes expected to include three or four bed apartments. These are now thought to be changes to lower specifications of one or two-bed units.
Benham & Reeves Residential Lettings’ data indicates that 49% of flats in its 15 London offices have two-bedroom units. One-bed units make up 22% of transactions, studios 11% and the remaining 18% houses and apartments with three or more rooms.
‘The top end of the market was booming so naturally developers started building luxury properties,’ von Grundherr noted. ‘No block of flats was complete without one, two or three multi-million pound penthouses, not to mention other high end developments in prime areas where the starting price was £1m. Now that these properties are finally hitting the market, demand has dried up.’[1]
Developers downsizing to appeal to buy-to-let market
Demand
Continuing, Mr von Grundherr said, ‘secondly, this isn’t Hong Kong or Manhattan. British families tend not to live in large apartments but in houses. Flats are for individuals, couples and downsizers. Even when we get a family asking for a larger property, they’re often renting while they look for something to buy or while they’re renovating their principle property.’[1]
‘Developers and especially planners need to recognise where the demand is. It’s for smaller units that let more easily and these units are also the ones in demand by owner occupiers,’ he concluded.[1]
[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/5/developers-downsizing-flats-to-appeal-to-buy-to-let-investors