Buying property in London? Look for that key postcode

Every London estate agent will tell you only three things matter when buying in the capital: location, location and location. So where do you choose?

James Hyman at Cluttons says the answer depends on your budget. "If you have £1 million [Dh5.68m] or more, you will want to focus on prime central London, close to Knightsbridge, Hyde Park, Kensington and Chelsea. Buyers who can't stretch to that should focus on Zones 1 and 2 on the London Underground map."

London is divided into postcode areas, each with six letters and numbers.

The most desirable postcodes start with SW and W, for south-west and west London, says Naomi Heaton at London Central Portfolio.

"Parts of SW1, such as prime Belgravia and Knightsbridge, represent a flight to quality in an uncertain world. SW5 and SW7, around South Kensington, are popular with wealthy students, while W8, Kensington, was historically expensive but now represents much better value.

Paddington, Bayswater and Notting Hill in W2 all offer exciting growth potential. "They are young, buzzy and with fast links to Heathrow Airport."

The ever-popular W1 divides into three distinct areas. Pricey Mayfair, up-and-coming Marylebone and more affordable Fitzrovia.

Investors looking to maximise their rental return should focus on smaller units, Ms Heaton says.

"Most tenants in prime central London work for major global corporates and have a budget to find accommodation. Properties which are too large, and hence too expensive, often have extended void periods, and considerably lower yields."

Buying a "tired" property gives you scope for capital growth. "You can give them an immediate uplift in value through refurbishment. They offer more profit opportunities than new developments, which are priced at a premium," she says.