London layouts never quite out of fashion

Garden squares are one of London's defining neighbourhood features, especially in Central London. The layout of the Georgian and Victorian squares has made a lasting contribution to the quality of life in London.

Their presence, combined with the quality and design of the residential properties that were developed around them at the time, has since proven that high-density (by today's standards) developments can also achieve high property values.

There are some 600 squares in London and a sixth of these are located in the Royal Borough of Kensington and Chelsea. Residential properties overlooking a garden square, especially a private one with shared access for the local residents, are known to attract premiums pushing values even higher in areas already at the top end of the London market.

Last year, the level of premiums achieved for flats sold in these squares compared to surrounding properties averaged 50 per cent, with Cleveland Square (Bayswater's premier square, where some properties have direct access to the communal gardens) attracting the highest premium of 62 per cent. With current sales in these squares well exceeding last year's prices, the premium commanded by property for sale in these enclaves looks set to rise further.

Sale trend

A total of 11 sales have been completed so far this year in these seven squares, according to data from Lonres.com. The highest sale price achieved was £6.6 million (Dh37.43 million) for a four-bed flat in Hyde Park Gardens, with sale prices across the squares averaging £2.47 million.

Last year there were just under 50 sales in these squares, with sale prices averaging £1.76 million and the highest sale price being achieved in Portman Square for a four-bed flat at £5.85 million.

Rental properties located in garden squares are also very well sought. Many corporate clients looking to find accommodation for staff with families are often given strict criteria with regards to outside space and this is where properties in garden squares can help meet that requirement in Central London.

Tenants, however, are less inclined to pay the level of premiums that purchasers are prepared to pay to own and therefore invest in a property. Rental premiums for garden square properties therefore range from 10 to 40 per cent.

Value appreciation

It is not just the green location of garden squares that is commanding a premium, for wealthy international buyers, a spacious, well-proportioned flat with a prime London postcode is as popular as the traditional investments such as gold.

Research has shown that large lateral apartments of 1,500 square feet or in prime postcodes have increased in value by 81 per cent between April 2009 and June of this year, performing far better than every other London property type. To put this into perspective, large apartments have performed twice as well as large houses in prime Central London postcodes.

During the same period the FTSE 100 index rose by 51 per cent, and even gold by 67 per cent rise between April 1 2009 and June 1 2011, according to figures from the London Bullion Market Association.

This is largely due to strong overseas interest from cash-rich foreign buyers in search of a safe haven who simply don't like climbing stairs, particularly if they are travelling a lot with a significant amount of luggage. In addition, many houses lack 24-hour security, a concierge and car-parking facilities which along with air conditioning are now absolutely must-haves for the super wealthy overseas buyers.

The writer is the chairman of Kay and Co, a London-based real estate agency.