Uptown still top-ranking (downtown too)

Urban Hot Spots: If you want to invest in property that's, to a large extent, proof against fluctuations in the world economy, there's nowhere better than the big city

We begin the new year much as we ended the old, with the second of a three-part round-up of top-drawer properties across the nation. Suburban homes were the focus of last year's final column, and next week we will explore country homes. London and the main provincial cities get a look-in today.

We begin the new year much as we ended the old, with the second of a three-part round-up of top-drawer properties across the nation. Suburban homes were the focus of last year's final column, and next week we will explore country homes. London and the main provincial cities get a look-in today.

"The top end of the market is very active, certainly isn't shy of paying up but is driven by discreet marketing," says Lulu Egerton of Lane Fox estate agents.

"The new millennium has brought record prices at the upper end of the market and, £1,000 per square foot is no longer a rarity." Discretionary sellers - vendors who don't have to sell but succumb to the temptation of diabolically high prices - "came to the forefront in the latter part of 2000," says Egerton.

"For example, a house in the Little Boltons recently sold for £6.75m without ever coming to the market. Only three years ago a house in this area went for £4m. This is a staggering uplift by any standards."

She is optimistic for 2001: "This level of the market will continue to trade quietly, discreetly and with big numbers. There is an increased polarisation at this level. The best properties still attract aggressive bidding and the lesser properties will continue to require careful marketing and pricing."

Andrew Phillips, associate director of Hamptons International, cites the benefits that prime central London areas derive from reputation. "There are financially safe areas in central London because there are always international buyers who invest in areas that are traditionally established. Overseas buyers know these prime areas, which include Kensington and Chelsea, Knightsbridge, Belgravia, Mayfair, Hampstead, St John's Wood and Notting Hill. International buyers need to be educated about non-prime areas," says Phillips.

Trendy, expensive areas such as Islington and Clerkenwell may be popular and well-known locally but are off the radar on the international map. In an economic downturn, prime areas will sell faster and at higher prices than areas which, in global terms, are less well known and are consequently marginal.

Peter Stevenette, associate director of DTZ Residential, is also bullish, even if the threatened global economic slowdown becomes a reality. "Previously, heat from the Far East kept the London market warm. That is no longer the case. There can be financial problems in the US, Europe or the Far East and it won't have a catastrophic effect on property values in prime areas of London. We saw this in 1990. The drop in values was a lot less in prime London than in the outskirts."

The Low-Down

Appetising properties

A five-storey freehold house in Covent Garden near The Ivy restaurant is selling for about £1m (Bushells, 020 7243 5000). Gloucester House, the listed Edwardian building whose ground-floor tenant is the Hard Rock Café, has been converted into four large apartments (about £5m each) and duplex penthouse (£8m); FPD Savills (020 7730 0822) and Hamptons (020 7584 204).

Wild about windows

A 2,260sq ft penthouse is available in the aptly named The Tower, a large detached Victorian house in Hampstead with a 30ftx28ft L-shaped reception room, dining room with double-height ceiling and exposed beams, and a "turret room" whose 20 windows provide an almost 360° view. The balcony is private, the gardens are communal, and residents have their own parking spaces. Knight Frank (020 7431 8686).

Hampstead redux

With land and mature woodland to screen the property, The Elms is a country house in the city. £10m buys this 15,000sq ft Grade II-listed Victorian house, which has 2.2 acres, nearly as many reception rooms (five) as bedrooms (seven), a five-car garage, swimming pool, staff accommodation and separate cottage. FPD Savills (020 7472 5000).

High views

In Leeds, the developer Kevin Linfoot is building penthouses that, with price tags of £3m-£4m, are more expensive than similar properties in the capital (0410 243 5874). Penthouses in Point West, Kensington start at £695,000 (0207 7373 3100). Ballymore's St John's in Westminster has views of Big Ben and the London Eye and has a price tag of £2.25m (020 7510 9100).

Riverside penthouses

In Shad Thames, Knight Frank is selling a ninth-storey duplex flat with a conservatory and river view adjacent to Tower Bridge (020 7480 6848). A triplex 5,000-plus sq ft apartment at St George's Wharf on the south bank of the Thames is being marketed by Hamptons for £4.25m (020 7584 2044).

Provincial

DTZ Residential has observed a "real upsurge" in Manchester, with more than 1,500 new homes under construction and 1,800 in the pipeline, in addition to 2,000 existing new units. "The market is growing in stature, with prices reaching in excess of £220 per square foot. The Commonwealth Games in Manchester in 2002 will further assist marketing and build activity up towards mid-2001." Similar analyses apply to Edinburgh, Glasgow, Cardiff, Leeds, Nottingham and Birmingham.

No contest

Land values reflect property values. According to the Valuation Office's property market report for autumn 2000, the price per hectare for a small site (less than five houses) is £2.75m in Edinburgh, £1.8m in Cardiff, and £1.3m in Birmingham. It leaps to £7m in Oxford, but Camden, which is just north of central London, boasts £11m. Of the five inner London areas cited in the report, the least expensive area, Southwark (£2.6m), is still more than twice as expensive as Leeds, York, Harrogate and Manchester, all of which hover around £1m.

Estate agents

Lane Fox, 020 7225 3866, John D Wood, 020 7352 1484, Jackson-Stops, 020 7581 5881; Russell Simpson, 020 7225 0277; FPD Savills 020 7535 3300.