In our Autumn 2016 Residential Review we looked at the implications of weaker Sterling on the relative cost of buying prime property in central London and Manhattan. Despite small fluctuations in exchange rates since, the relative weakness of the pound versus the dollar continues to narrow the gap between prices in New York and London.
Recent reports suggest London is now a more affordable proposition for those looking to invest or relocate from overseas. According to the Economist Intelligence Unit, the cost of living in London relative to other major cities has fallen¹. London fell 18 places to 24th in the rankings this year, falls attributed to Brexit uncertainties and a sharp depreciation in the value of the pound. This is despite London property being considerably more expensive historically. Indeed, from an international perspective London is a cheaper place to be a consumer than New York for the first time in 15 years.
LonRes research shows that (keeping in mind the pound dollar exchange rate) the premium between Prime London and Manhattan real estate has narrowed. In dollars, premiums are the lowest they have been since 2009.
At the start of 2017 achieved prices in the most expensive New York and London neighbourhoods were achieving similar values per square foot. TriBeCa, at $2,612 PSF² was cheaper than the $2,793 PSF achieved in Mayfair³, but more expensive than Knightsbridge and Belgravia ($2,217 PSF).
Comparing the neighourhoods of New York’s West Village with London’s Chelsea, now suggests an 11% discount for the London district. We see a similar relationship between the residential areas that cater to either cities financial hubs. New York’s Financial District/Battery Park ($1,192 PSF) commands a premium of more than 20% over London’s Canary Wharf ($923 PSF).
The table below gives a more comprehensive comparison of New York areas with our interpretation of London equivalents.
Both New York and London are destination cities, for tourists and investors alike. However, as the price gap narrows, it gives overseas buyers, particularly those with dollar pegged currencies, a further incentive to choose London over New York.
Of course price is not the only consideration. Access and ease of purchase will also drive buyers into the London market. While buying costs in London have risen in recent years, holding costs are low and buying property is a much more simple process than having to navigate New York’s selective co-op system.
¹ The EUI had calculated the cost of a set of goods in over 130 cities to generate this ranking.
² Source: Property Shark, January 2017.
³ Source: LonRes, January 2017.
William co-founded LonRes with Anthony Payne in 1999. He began his property career in the mid 1980s with a small family firm based in Knightsbridge. In 1992, he joined forces with Charles Boston, establishing Boston Carrington Pritchard based in Sloane Street, where he specialised in Landlord and Tenant work. William is a director of CLEA Ltd, which owns The London Magazine, and remains a consultant to Boston Radford Surveyors.