Planning restrictions and rising construction costs are stifling the construction of new luxury homes in Mayfair, with supply falling to a 10-year low, a recent report has highlighted.
The decline in new prime homes has sparked a surge in demand for luxury lettings and high-end hotel suites from international HNWs looking for a London pied-à-terre, according to the latest Mayfair real estate survey by Wetherell.
More than 500 luxury homes, collectively worth £1.9 billion, were built and sold between 2017 and 2023 in the prestigious London postcode. This construction drive expanded Mayfair’s residential stock by 10 per cent, with new homes accounting for 60 per cent to 85 per cent of all Mayfair home sales each year. Buyers from India, the Middle East and Asia increasingly prefer newly built lateral homes and premium amenities such as concierge services, gyms, swimming pools and spas.
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The ban of space
But the Westminster City Council Development Plan has stunted the construction of new builds in the area. The restrictions impose a maximum unit size of 2,150 sqft (200 sqm) for new developments, and this, coupled with escalating land, labour and construction costs, has led to a steep drop in the number of new homes being planned and built in Mayfair.
Spear’s Top Flight property broker and ‘Mayfair Guru’, Peter Wetherell, founder and executive chairman of Wetherell, said: ‘Over the next three years, just 65 new luxury residences will be completed, compared to 467 new luxury hotel rooms.
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‘We expect a further rise in lettings values, hotel revenues, and a 30 per cent increase in Mayfair home sales in 2025, driven by buyers from the Middle East, America, and India. While the most sought-after homes will rise 1-2 per cent in value, other properties will likely maintain stable pricing.’
Hotel accommodation and lettings boom
Currently, only three new luxury residential developments are under construction: 1 Mayfair, One Carrington, and Three Kings Mayfair, collectively offering just 65 newly built homes. Alongside the recently completed 60 Curzon Street, which provides 34 new apartments, the total number of new or pipeline homes available is just 99.
[See also: 1 Mayfair – the latest prestigious development using ‘One’ in its name]
With wealthy visitors unable to buy new residences, they have turned to high-end rentals and hotel accommodations. As a result, in 2024, Mayfair’s lettings market flourished, with rental prices averaging £90 per sqft compared to £65 per sqft across Prime Central London.
The average weekly rent for a two-bedroom Mayfair apartment reached £1,710, significantly higher than the £1,107 average for Prime Central London. Similarly, three-bedroom flats commanded £3,270 per week versus £1,978 in PCL, while four-bedroom flats were let for £6,000 per week compared to £3,025 elsewhere in PCL. The highest rental values have been achieved in prestigious developments such as 20 Grosvenor Square, One Grosvenor Square, and Clarges Mayfair.
Luxury hotels in Mayfair have also seen a notable increase in demand. Between 2023 and 2024, the West End hotel occupancy rate, centered around Mayfair, rose by 8 per cent to nearly 80 per cent, with the average revenue per available room reaching £230, marking a 12.4 per cent increase.
[See also:1 Mayfair – the latest prestigious development using ‘One’ in its name]
Hot new openings
Notable luxury openings in W1 include the Mandarin Oriental in Hanover Square (2024) with 50 rooms, the St Regis London (2025) with 196 rooms, Cambridge House (2025) with 102 rooms, The Chancery Rosewood (2025) with 146 rooms and the Oberoi Hotel (2027) with 23 rooms.
Despite the shortage of new homes, Mayfair’s residential sales market remained robust in 2024, outperforming neighbouring Belgravia and Knightsbridge, which experienced slow sales and declining values. Mayfair recorded 93 second-hand home sales in 2024, the highest in a decade, compared to 82 in 2023 and 81 in 2022. Mayfair averages 75 sales per year.
Of those sales, 30 per cent were for properties priced above £5 million, while 9 per cent exceeded £10 million. Several transactions surpassed £20 million, including two above £50 million.
In 2024, 40 per cent of Mayfair’s buyers were domestic, while 60 per cent were international, with the most significant buyer groups from the United States, the Middle East, and India.
Wetherell’s Mayfair 2025 Residential Market Report provides in-depth analysis of sales and lettings data from 2023 and 2024, sourced from LonRes, the Land Registry, and Wetherell’s local market intelligence. Additionally, the report incorporates data on luxury hotel demand and room rates from AND London.
