Central London shops crowned "safe haven" investments - but prime residential prices continue to fall

Helen Cahill
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Christmas Past and Christmas Present
The best shopping locations in the UK are in demand (Source: Getty)

Central London shops have been a "safe haven" for investment after the Brexit vote - but prices for high-end homes in central London have been falling.

Investors bought up £1bn worth of prime retail property in central London during the first half of the year, according to CBRE - and total investment is set to jump in August, with £450m worth of deals being completed.

Read more: Here's everything you need to know about house prices since the Brexit vote

CBRE said investors continued to trust that London's most popular retail spots are "relatively protected from the macroeconomic headwinds that have caused nervousness in other markets."

Overseas investors - who benefit from recent falls in the value of sterling - were particularly keen, representing 60 per cent of the total investment into central London shops.

Phil Cann, head of retail at CBRE, said: "London shops have been seen by many as the ultimate safe haven investment, with buyers bucking the 'wait and see' trend we have seen in other sectors.

Read more: London led growth in commercial rents in the second quarter

"The strong investment volumes in the first half are even more remarkable when considered against the backdrop of uncertainty created by the EU referendum and what is normally a typically slower first half."

However, high-end residential property has not been performing quite so well.

Prime residential prices were "notably quieter" in the second quarter due to uncertainty surrounding the EU referendum and a slowdown after landlords scrambled to buy properties before the introduction of a higher stamp duty rate.

According to JLL, average prices have fallen by 3.3 per cent in the year to the second quarter - but they have been falling for every quarter since the first quarter of 2015.

Read more: Office capital values in the City of London hit after the Brexit vote

Prices fell by 1.1 per cent in the first quarter and then by another 0.9 per cent in the second quarter. JLL said price falls over the past year have hit high-value properties particularly hard - but large, single-floor flats have performed better than houses or other types of apartment.

Neil Chegwidden, residential research director at JLL, said: "Given recent uncertainty it is unsurprising that prices have weakened again during the second quarter."

The research from JLL follows on from similar data released by Knight Frank researchers, who found that prime central London house prices fell by 1.5 per cent year-on-year in July.

Knight Frank said it was too early to tell what the effect of the Brexit vote will be on residential property, but said that price reductions were overdue and that they reflected "what would have been an appropriate price before the referendum."

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