Marylebone enters the prime time

Rising demand from affluent buyers, outstanding food and retail facilities and new high quality developments have led to the redefinition of Marylebone as an integral part of the prime central London residential market.

The boundary of prime central London expands slowly over time. In recent years we have recognised this growth by adding Notting Hill to our index in the early 1990s, followed by the South Bank last year.

With the inclusion of Marylebone we have acknowledged that another area of central London has a proven track record to justify inclusion in our Prime Central London Index.

Marylebone extends north from Oxford Street to Marylebone Road, and from Edgware Road in the West to Great Portland Street in the East. It also includes the area around Dorset Square and Marylebone railway station, just to the north of Marylebone Road.

The area encompasses the Georgian Portman Estate, world-class cultural attractions such as the Wallace Collection and Wigmore Hall, and the restaurants and retail facilities of Marylebone High Street.

The upgrading of the area to prime is partly the result of the retail-led regeneration policy pursued by the Howard de Walden Estate on and around the High Street.

It has gradually created an exciting mix of upmarket independent shops, with a particular emphasis on fashion and food, which has helped draw in affluent residents. A number of London’s most acclaimed restaurants are also nearby.

It has also been driven by location – with Mayfair to the south seeing astonishing growth in demand values, it is unsurprising that this boom has expanded north of Oxford Street.

Meanwhile, major regeneration projects in Paddington, Euston and King’s Cross are improving the fortunes of Marylebone’s neighbours to the north, east and west.

Property availability and performance

Development is highly constrained, a result of the careful management of the area by the two estates, which has protected the area’s architectural heritage.

CPC Group’s 11 Picton Place, a development of 14 one-, two- and three-bedroom luxury apartments within sight of Selfridge’s, is virtually the only new scheme in the area.

Together with the concentrated ownership patterns, this has resulted in a shortage of stock for sale – which drove up prices across the whole of the market by 2007 since 35%.

The shortage continues to drive values for prime properties to unprecedented heights, aided by the influx of foreign buyers into the area, particularly from India and the Middle East..

Some locations, notably around Bryanston and Montagu Squares, are now regularly fetching over £1,400 per sq ft. Last year, few homes broke the £1,000 per sq ft barrier.

Nevertheless, the area still represents substantially better value than Mayfair – which is just the other side of Oxford Street – where values regularly reach as much as £3,000 per sq ft.

In common with the rest of the market, however, more mainstream price bands have slowed since the beginning of 2008.

Future prospects

Liam Bailey, Knight Frank’s head of residential research, says: “The constraints on development and ownership in the area should ensure that prices remain resilient through the downturn, and are well-positioned for sharp growth when health returns to the market. The best properties are unlikely to lose value, given the ongoing demand for prime accommodation.”

“There is an abundance of rental stock in the area, much of it owned by the two estates. However, values continue to grow, in common with much of the rest of Central London. Growth of over 5% is predicted throughout the capital during 2008, boosting investment yields.”

Transport links, particularly via the Jubliee Line to Canary Wharf and the City, will ensure that its popularity with high-earning professionals will continue. The area also sees strong demand from wealthier international students at the various business schools.

In the medium term, this value uplift will spill over into Fitzrovia and Bloomsbury, aided by the vast new development at King’s Cross, the international station at St Pancras, and new developments such as Noho Square, the 216-home redevelopment of the former Middlesex Hospital managed by Candy & Candy.

Both areas offer a similar mix of Georgian properties and garden squares, but at lower prices than Marylebone. The potential for growth here is significant in the longer term, as prime Central London continues to expand.

For more information, visit knightfrank.com