A desirable London mansion overlooking iconic Regent’s Park has had £50million shaved off its asking price of £180m, signalling that even the top end of the capital’s housing market is feeling the impact of economic downturn.
Indian businessman Ajay Kalsi is said to have snapped up the Grade-1 listed 1-18 York Terrace East – which has permission to be turned into 26 flats and two houses – for just under £130m.
The row of houses, designed by Buckingham Palace architect Josh Nash and spanning 95,000 square feet, originally came with a much higher price tag, but the sale is said to be ‘an immense relief’ for property firm Zenprop, which bought the building in 2016, reports Financial Times.
Desirable Grade-1 listed 1-18 York Terrace East in London has sold with £50million shaved off its asking price of £180million
Zenprop originally intended to develop and flip the property for a profit, but this plan was scuppered by Brexit, then the pandemic and most recently, the war in Ukraine, which have contributed to inflation, rising interest rates and construction costs, according to a person with knowledge of the sale.
‘No sooner have you bought [the property] than you hit the concrete wall of building costs, going up by the day for bricks, cement, wood, everything.
‘Build costs [could be] well over £1,000 per square foot,’ said one person involved in the deal.
Alongside this, experts are predicting a general sharp downturn in house prices as mortgage rates soar and the cost of living spirals.
Amid concerns that ‘a day of reckoning’ looms, analysts are expecting falls of 7 per cent over the next two years, with London and the South East hit even harder.
The property market has generally boomed since the pandemic, with prices reaching record highs.
But signs of a slowdown are emerging and forecasts for 2023 and 2024 are increasingly gloomy.
For ‘prime’ properties, the decline may already have begun. According to estate agent Savills, average prices in this tier in London are 17.6 per cent below their 2014 peak.
The impact of fewer wealthy foreign buyers in the capital willing to take on large development projects is also taking its toll on the luxury end of the market.
Many left during the pandemic and have yet to return.
Indian businessman Ajay Kalsi is said to have snapped up the John Nash-designed building from property firm Zenprop
‘There are no Russians obviously, few Chinese and very few Arab buyers,’ said Andrew Langton, chair of Aylesford International, the company marketing York Terrace East alongside Savills.
Analysts at Capital Economics have forecast a two-year downturn, with house prices falling by around 5 per cent in 2023 and a further 2 per cent in 2024.
The research firm predicted that demand will plummet as rising mortgage rates, high inflation and a looming recession weigh on buyers’ budgets and confidence – causing housing market activity in 2023 to slump to its lowest level in over a decade.
But some analysts remain optimistic. Anthony Codling, of property website Twindig, said: ‘We tend to overestimate the likelihood of bad things happening. House prices have fallen in only 16 out of the last 91 years.
‘Once we have won the war on inflation we can expect prices to continue to rise.’