Property Investment opportunities in Kensington

With a 7.2% growth in capital appreciation over the past year, properties in Kensington appear to be a bullet-proof investment choice for property investors. The relatively low rental yields are offset by the fact that property prices are historically resistant to political and economic variables. With this in mind, it’s still wise to look at the various factors influencing growth within the Royal Borough.

Rental averages are in the £550 – £1,200 per week bracket and for that kind of money, top level corporate executives who love this part of London, expect to find the kind of space and luxury for which Kensington is renowned. From the museums of Albertopolis, to the leafy environs of Holland Park, there are many examples of “vintage Kensington” to enjoy. Cobbled streets and garden squares lend an air of genteel exclusivity to a pristine mix of red-brick mansion blocks, stucco-fronted townhouses and mews cottages. Phillimore Gardens and Edwardes Square with their traditional wrought iron railings, well-proportioned rooms and late Georgian finery, continue to be among some of the most desirable addresses to be found in London.

However, as attitudes towards regeneration change, property developers are making sure that their projects stand out for all the right reasons. The Kensington brand sells itself so in the case of 375 Kensington High Street, trendy nicknames and acronyms have been avoided in favour of a straight forward address; however, what it has to offer occupants of its 339 apartments is something far from dull. In addition to the usual private gym/swimming pool combination, tenants can avail themselves of a Harrods concierge service. Popping into the planet’s most famous department store in order to stock up with caviar is one thing; calling for supplies in the middle of dinner is quite a different matter altogether!

Indeed, cutting edge interiors and a selection of on-site amenities is a sure-fire way of maximising yields in Kensington and attracting the right type of tenant. The area typically attracts corporate executives from all over the globe and more notably, wealthy foreign students who make excellent long-term tenants while they study here.

Looking at rents in the area, a one bedroom flat in a new development will let for £650 per week while a one bedroom conversion or mansion flat typically fetches £50 less. When three bedroom apartments are compared, the new builds still come out on top, commanding an average of £1,500 per week as opposed to £1,400 per week. Due to the desirability of the area, we’re seeing another favourable trend that prospective tenants are willing to pay six months in advance and frequently use a guarantor.

The success of 375 Kensington High Street has kick-started a mini revival in the western section of the neighbourhood. With the Design Museum about to relocate to the old Commonwealth Institute, just opposite the Odeon cinema, there are plans to flank this new building with 62 apartments to be called Holland Green. The complex will be designed by award-winning architect John Pawson and will overlook large swathes of Holland Park. The cinema itself is set for redevelopment and will retain its much-loved art façade, while providing the setting for 40 luxury flats. Completing a trio of new apartment buildings in the immediate vicinity is the Post Office building at 257 Kensington High Street which will be converted into 72 residential apartments.

The views across Hyde Park are just too good to miss. Kensington Gardens, an uber-luxe new development situated in De Vere Gardens at the top of the High Street, provides the ideal vantage point. The development comprises 97 apartments, arranged over nine stories and priced at approx. £3,000 per square foot. Rental yields are expected to be around 2% when it opens later this year.

With French tax exiles and wealthy families seeking spacious homes, the traditional Kensington combination of large townhouse and expansive garden remains popular. However, the majority of Kensington rental property enquiries currently are for smaller units and investors looking for capital growth would do well to investigate this possibility further.

Bear in mind that the bigger the tenant budget, the bigger the expectation. A hotline to Harrods may be out of the question, but luxury bathrooms and state-of-the-art kitchens should be standard. For inspiration, take a look at a Kensington property we refurbished on behalf of an overseas investor.

For further advice about renting or letting a property, contact our Kensington lettings branch who will be happy to give you an up-to-date valuation.