Turning tide

• City Apartments’ acquisition of the Atelier House property in London EC1 was accompanied by an admission from director David Smith that the company has struggled to find new inventory in the City of London which meets its quality standards. This is partly due to the fact that, aside from being a very competitive market where every operator wants to establish a presence, the value of residential units has risen so sharply over the last seven or eight years that many developers haven’t looked beyond the very profitable model of solely building residential units for market sale. The number of new units coming in to the serviced apartment pool has been relatively few during this time.

But this could be about to change. For starters, property prices in London, after their long and dizzying climb, are falling back. According to LCP The average house price in June for prime central London was £1,754,317, still a staggering figure, but 8.2 per cent lower than a year ago and 6.9 per cent down on the previous quarter. Annual transactions fell 8.5 per cent to levels last seen during the global financial crisis, with new-build transactions falling 17.3 per cent across the year.

Add to this a growing trend for mixed-use and PRS developments – which will also force the number of house sales down – and we could see developers widening their product mix and building more properties for the serviced apartment market. Let’s hope it happens.