Daniel J SaitLondon’s luxury property market is showing signs of strain, with unsold apartments piling up and wealthy buyers increasingly choosing to rent. Could this spell trouble for the smart home installation sector, or has the industry already begun to move away from its traditional reliance on super-prime projects? EI wants to hear your views.
A report published in The Guardian on November 11 paints a concerning picture of London’s high-end residential property market, raising questions that could have significant implications for the custom installation industry.
According to the newspaper, citing research from property market specialist Molior, there were 1,400 completed but unsold homes in central London’s Zone 1 at the end of September, three times the number recorded in 2016. Meanwhile, construction starts in the area have fallen by 75% over the past decade.
The Guardian identifies several factors behind the slowdown, including rising construction costs, higher borrowing rates, changes to property taxation and reduced demand from wealthy overseas buyers.
The consequences are already being felt. Several developers have entered administration, while major players including Berkeley Group and Taylor Wimpey are scaling back their London ambitions.
Perhaps most interestingly, the report also highlights a change in behaviour among wealthy buyers. Rather than purchasing expensive London properties, some are choosing to rent. Figures from property consultancy JLL reveal that 338 homes commanding annual rents above £150,000 were leased over the past year, a record figure and a 14% increase.
What does it mean?
Traditionally, super-prime residential developments have represented a lucrative opportunity for custom installers. High-value properties often demand sophisticated lighting control, whole-home automation, premium audio, dedicated cinemas and advanced networking.
A slowdown in this market could therefore mean fewer projects and increased competition for the work that remains.
However, there is another question worth asking. Have some integrators already fallen out of love with the super-prime sector?
Large, complex projects can offer substantial rewards, but they can also involve unpredictable schedules, demanding clients, lengthy payment cycles and exposure to the fortunes of developers. Has the uncertainty encouraged installers to pursue smaller, more manageable projects with potentially healthier margins?
The growing rental market raises another interesting issue. Even wealthy tenants may be reluctant to invest significantly in technology upgrades to properties they do not own. Could this reduce opportunities for bespoke integration, or might landlords increasingly recognise that high-quality smart home technology helps attract premium tenants?
There is also the wider question of diversification. With opportunities emerging in retrofit, home networking, energy management, shading and more accessible home entertainment systems, perhaps the industry’s future is less dependent on multimillion-pound properties than it once was.
We want to hear from you
Is the slowdown in London’s luxury property market affecting your business? Are super-prime projects still attractive, or have you deliberately shifted towards other customers and opportunities? And could the growth in luxury renting change the type of technology being specified? What is the situation in other parts of the country?
The Guardian’s findings raise some important questions, but only those working directly in the sector can tell us what is happening on the ground.
Tell Essential Install what you think. Is super-prime still the ultimate prize, or is the smart home industry moving on? email dan@essentialinstall.com with your thoughts.