A survey by Wetherell found that the supply of luxury new homes for sale in Mayfair has hit a 10-year record low due to new planning restrictions and rising construction costs.
This decline in available properties has increased demand for luxury lettings and hotel suites in the area.
Wealthy international visitors who are unable to purchase new pieds-Ã -terre have opted to rent newly built apartments or hotel suites instead.
Wetherell’s Mayfair 2025 Residential Market Report found that while over 500 luxury homes were built in Mayfair between 2017 and 2023, generating £1.9bn in sales, new planning rules now cap unit sizes at 2,150 square feet.
This, coupled with rising costs, led to a sharp decrease in new homes during 2024.
Only three new luxury residential developments are under construction in Mayfair: 1 Mayfair, One Carrington, and Three Kings Mayfair, providing 65 newly built homes.
Added to this is 60 Curzon Street with 34 new apartments, making just 99 new or pipeline homes available.
The reduction in new homes has boosted demand in Mayfair’s luxury lettings and hotel sectors.
In 2024, the average rent in Mayfair soared to £90 per square foot compared to £65 per square foot in the rest of Prime Central London.
Two-bedroom apartments rented for £1,710 per week, significantly higher than elsewhere in Prime Central London.
Hotels have also seen increased demand, with occupancy rates in Mayfair nearing 80% and average revenue per available room reaching £230, up 12.4% on 2023.
This has led to a surge in luxury hotel development, including new openings such as the Mandarin Oriental in Hanover Square, and future openings like St Regis London and Cambridge House.
Despite the low supply, the Mayfair residential sales market performed well in 2024, outperforming nearby areas like Belgravia and Knightsbridge.
The area saw 93 second-hand home sales, a 10-year high, with significant sales in the over £5m and £10m brackets.
Almost 55% of sales achieved values over £2,000 per square foot, compared to 24% in the rest of Prime Central London.
Peter Wetherell, founder and executive chairman of Wetherell, said: “Planning restrictions and rising construction costs have resulted in the supply of luxury new homes for sale in Mayfair hitting a 10-year record low.
“This lack of supply has helped to trigger a boom in Mayfair’s luxury lettings and hotel sectors since wealthy international visitors to Mayfair, unable to purchase new pieds-à -terre, have chosen to either rent Mayfair newly built apartments or hotel suites during their stays.
“Over the next three years just 65 new luxury residences will be built and completed in Mayfair compared to 467 new luxury hotel rooms.”
Wetherell added: “During 2025 we are likely to see a further increase in lettings values and a rise in the average revenue per available room in Mayfair’s luxury hotel sector.
“We also forecast that the volume of Mayfair home sales will rise by 30%, the market driven by buyers from the Middle East, America and India, and values for the most sought after homes will rise by 1% to 2% in value whilst the rest of the stock will stay stable in value.”
