LIVE LIFE IN THE CITY OF LONDON

WHAT ARE THE DRIVERS OF LONDON’S LONG-TERM OUTPERFORMANCE?If any city could claim to be ‘capital of the world’, it is indisputably London. Renowned for its global standing in terms of business and trade, amenities, quality of life, facilities offered and stable legal and political systems, London is the most high-profile location for property investment across the globe. According to Real Capital Analytics, $397.7bn was invested into London real estate during 2015.

As the powerhouse of the UK economy, London is growing stronger still; over the past 10 years it has contributed £3 trillion to the UK economy (21% of GDP), according to Oxford Economics. With many company headquarters based in London a consistently high number of people move to the Capital, and this is a key driver of prime rental demand.

Despite the vote to leave the EU, London remains a key centre and continues to be the preferred global destination for people to invest, work and live.

Our analysis shows that a $2m property in London for foreign

buyers remains very competitive on the global stage when the costs of purchasing, holding for five years and selling the property are considered. The transactional costs in London remain less expensive than New York (arguably London’s main competitor when it comes to international property investment), as well as Hong Kong, Paris, Tokyo and Singapore. Vancouver, a popular investment hotspot for Asian buyers, now tops the table in terms of highest transaction costs as a percentage of property price (at 27.8% compared to 12.6% for London property), as an additional 15% tax for overseas buyers has recently been introduced.

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A PLACE APART, COMPLETELY CONNECTED

Barts Square is perfectly placed to exploit the continued interest in London’s property market. Nestled between vibrant Smithfield and Clerkenwell and the financial heart of the City, yet with a character all of its own, it is a landmark mixed use development creating a genuine new urban quarter in a historic part of the City of London.

The scheme comprises 236 high quality apartments (fully private), 230,000 sq ft of office space over 2 buildings and 23,000 sq ft of new retail/restaurant space set within a beautifully landscaped environment.

Computer generated image of interior at Vicary House

WHY INVEST IN LONDON? 3

The City of London, also known as the Square Mile, is the historical and financial district within London, home to the headquarters of some of the world’s largest finance and insurance companies. The local authority for the City of London is the City of London Corporation headed by the Lord Mayor of the City of London, separate from the Mayor of London.

Savills Prime London Index monitors the price movements of prime second hand residential property by sub-markets. The movement of prices in the Prime North and East sub-market is most relevant for understanding price growth in the City. Values in Prime North and East London have consistently outperformed other prime regions over the last 5 years to Q2 2016, growing by 36.4%, considerably higher than the 11.6% seen in Prime Central London over the same period.

THE CITY OF LONDON & BARTS SQUARE

COMMERCE & EMPLOYMENTThe economy of the City is not limited to the financial sector. Legal firms, the public sector, hospitality and retail and leisure businesses also have a strong presence.

17,775 BUSINESSES ACTIVE IN THE CITY

800–1,000NEW START-UPS PER YEAR IN THE CITY

430,000PEOPLE EMPLOYED IN THE CITY

37,500ADDITIONAL JOBS PROJECTED BETWEEN 2016 AND 2026

RARE, REFINED CITY RESIDENCES

Barts Square is well positioned to take advantage of this continued demand given the scheme’s proximity to the City’s key employment centres. An intimate, quiet new quarter, each of its exquisite residences is entirely unique, the meeting of centuries of history and impeccably finished contemporary design. Quite unlike anywhere else in London.

This new residential quarter houses a collection of apartments and penthouses in elegantly crafted buildings. Intimate, cobbled and characterful, Barts Square is a short walk from the heart of the City but a world apart. It sits on a long-established route between the Smithfield Conservation Area and St Paul’s, linking London’s historic heart with its financial centre. With the arrival of Farringdon Crossrail station in 2018 and planned regeneration around Smithfield Market, Barts Square is adding an exciting new chapter to one of London’s oldest stories.

£1,000MOST WORKERS IN THE CITY EARN OVER £1,000 PER WEEK, MORE THAN TWICE THE UK AVERAGE

47%OF WORKING RESIDENTS IN THE CITY OF LONDON WORK WITHIN 2 KM OF THEIR HOME

Source: Oxford Economics, July 2016

Computer generated image of Dominion House

Computer generated image of Barts Square

5WHY INVEST IN THE CITY OF LONDON?

LIVING IN THE CITY OF LONDONThe City of London is distinctive as it is such a small residential market – just 6,000 homes exist, compared to a larger borough such as Westminster with 110,000 homes.

The majority of these residences (61%) are in the North of the City where Barts Square is located. This is an established residential area.

The City provides convenience for people working in the City and Central London, pied-a -terre and corporate lets.

Apartments in the City aren’t just for City workers however. Many residents have lived in this part of London for many years and appreciate the oasis of calm it provides.

International investors appreciate that limited residential supply and high demand for rental property provides a great opportunity as well as the potential of capital gain in an area which is extremely well located and popular.

TENURE PROFILEWithin the local area, 62% of households are private renters, far higher than the London average of 26%. This suggests that there is considerable appetite for private rented stock in the City.

Owned

Socially rented

Private rented

Local Area (EC1A) City of London London

Source: 2011 Census

Computer generated image of Little Britain Computer generated image of The Underwood Building

7WHY INVEST IN THE CITY OF LONDON?

AVERAGE TRANSACTION VALUE (£)12 MONTHS TO MAY 2016

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FA R R I O N G D O N

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C I T YT H A M E S L I N K

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B A N K

M O N U M E N TM A N S I O N H O U S E

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H Y D E PA R K

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PROPERTY PRICES IN THE CITY

In the City of London, the average sale price during the 12 months to May 2016 was £917,000, 62% higher than the London average. The City still offers a considerable discount to the neighbouring borough of Westminster, where the average property price is just over £1.4m. As such, it is well placed to cater for owner occupiers who are priced out of prime central London but

who still desire the proximity to central London.

Price growth in the City has been very strong over the last 10 years, with prices nearly doubling over this period.

Within the City there are pockets of high value, particularly the area running from the Barbican south towards St Paul’s. Barts Square sits on the cusp of this pocket where

the average sales price is around £1,000,000.

Across the City of London, the average monthly rent is £2,200 according to Rightmove. This ranges from just under £1,850 for studio apartments up to over £7,000 per month for a 4+ bed home.

LIMITED RESIDENTIAL SUPPLY IN THE CITY

The City of London Corporation recognises that the City is predominantly a commercial area. There has therefore been limited new residential supply in recent years, and looking ahead, a very limited pipeline. Any sites with residential planning permission in the City are therefore incredibly unique and present an opportunity to meet the high demand from the City’s vast employment pool.

The City of London is very central but has seen very little new development of scale. Barts Square

presents itself as a distinctive product in an environment where there is little developable land.

There have been just six schemes of more than 15 residential units completed in the City of London since 2010, equating to 650 units. These schemes are: The Heron, Frobisher Crescent, Three Quays, Sir John Lyon House, St Dunstan’s Court and Roman House.

Aside from Barts Square, there are only seven schemes (of more than 15 units) that are expected to deliver private

units over the next 5 years equating to 730 private residential units.

By comparison, the neighbouring borough of Westminster has 150 schemes, totalling 8,300 private units in the pipeline.

Residential schemes in the planning pipeline in the City tend to be small in scale. 75% of schemes in the pipeline are less than 100 units. Barts Square is currently the only development in the City with more than 200 units.

Above £1 million

£950,000 to £1 million

£900,000 to £950,000

£750,000 to £900,000

£500,000 to £750,000

£250,000 to £500,000

Source: Land Registry

Computer generated image of interior at The Underwood Building Computer generated image of Hogarth House

Denotes The City

9WHY INVEST IN THE CITY OF LONDON?

It is important to consider the outlook for the City within the wider context of the prime London market.

THE SALES MARKET

In the period of the past 18 months the prime London housing market has faced a number of challenges as a result of a changing political and fiscal environment as well as tighter mortgage regulation.

The reform of stamp duty announced in the 2014 Autumn Statement and the subsequent 3% “Additional Homes” surcharge has had a bigger impact on the prime London market than many forecast. However, where the tax burden has increased, the adjustment to prices has been relatively rational and in line with the additional stamp duty increase.

The referendum vote to leave the EU is expected to result in added caution in the prime residential property markets. However, the

fact the governing Conservative party has swiftly resolved its leadership post referendum will undoubtedly provide greater political certainty. We expect the UK government will be highly motivated to protect London’s position as a major global financial centre in any negotiations with the EU. Although it is too early to be confident about the precise impact of the vote to leave the EU, in the short to medium term, interest rates are expected to remain lower for longer and the weakness of Sterling will present a buying opportunity for international investors.

In prime London, we expect a slow market over the remainder of 2016 as buyers wait to see how negotiations to leave the EU proceed. However, positive price growth is expected to return and Savills forecast growth of 14.6% between 2017 and 2021. This presents an opportunity for those taking a medium to long term investment view.

THE RENTAL MARKET

With recent market uncertainty as a result of the EU referendum, buyers’ caution is expected to push demand into the rental market in the short term.

London’s economy is still forecast to continue strengthening in the long term, which will underpin demand for prime rental property as people continue to relocate to London for employment. The City is well placed to draw on this demand as a large proportion of tenants currently move to the area for this reason.

In the City, we do not expect a high level of new build stock to come forward compared to other locations in London. This means that supply will remain constrained and rents will therefore not be suppressed by a high number of properties being brought to the market simultaneously.

OUTLOOK FOR THE MARKET

A CULTURAL AND RESIDENTIAL EVOLUTION

The City has always been the economic and financial centre of London, with some of the largest global companies based within this world-famous square mile. However, The City has evolved drastically to also become a major cultural hub for London.

The Barbican Centre, a titan of London’s cultural make up, now welcomes 1.77 million visitors through its doors each year and is still Europe’s largest arts centre under one roof. Other significant monuments to the city’s cultural richness include The Museum of London, which is set to move from its current location to its new site a stone’s throw from Barts Square, and the Guildhall School of Music and Drama – a leading and internationally renowned conservatoire and drama school. With such significant regeneration, the cobbled streets of the square mile are no longer solely the preserve of The City’s businesses, but also a place to live.

INFRASTRUCTURE & CONNECTIVITY

Travel time to central London locations is one of the key drivers of value for London property. Whilst the City is already very well connected, Crossrail will provide a step-change in commute time.

The introduction of Crossrail will considerably reduce the travel time from Farringdon to Bond Street in central London from 18 minutes to 4 minutes. Investment in public realm and new commercial developments will also hugely increase the area’s attractiveness as an employment, leisure and retail destination, which is likely to be reflected in residential property values.

6 minute walk to nearest train station from Barts Square. Train stations: Blackfriars, Moorgate, Cannon Street, City Thameslink, Farringdon

1 minute walk to Crossrail station from Barts Square. The new Crossrail station at Farringdon l is anticipated to complete in 2018

5 minute walk to nearest Tube station from Barts Square. Existing tube stations: Bank, Moorgate, Mansion House, Monument, St Paul’s

Computer generated image of Barts Square*Walking times are from Barts Square and sourced from walkit.com

11WHY INVEST IN THE CITY OF LONDON?

All computer generated images are of Barts Square

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