Demand for “superprime” properties in central London – properties worth more than £10m – has increased significantly in the past few months as
confidence in the global economy has improved, according to property agents.
Trophy homes were in high demand before the credit crunch but an uncertain outlook for the economy, along with the general election and the emergency Budget, contributed to a slowdown in parts of the prime market.
But agents say that more realistic pricing by vendors has driven new buyers into the London superprime market following the summer lull.
“During the summer we had a lot of high-net-worths and ultra high-net-worth buyers looking at property but not a lot of deals were being done,” says Tim Wright, head of Knight Frank’s Kensington office. “This changed from August onwards and suddenly we started to do a lot of deals.”
Research from Savills shows that just over £1.1bn worth of properties valued at more than £10m were sold in the first three quarters of this year. This represents 80 per cent of the amount for the same period in 2007, the peak of the
“Much of that reflects the fact that this is effectively an international market reliant not just on the wealth generated in the UK economy, but also less developed economies that have greater capacity for economic growth and wealth generation,” says Lucian Cook of Savills.
Figures from Knight Frank show that prime prices started to fall in July, while the volume of superprime buyers dipped by 30 per cent in the first half of the year. However, by the end of October the number of £10m plus buyers had regained all of this decline.
Wright believes the increase in demand is down to sellers becoming more realistic about pricing which coincided with buyers deciding during the summer that the UK was unlikely to experience a double dip in the economy.
Robert Bailey, a London-based buying agent, agrees. “Earlier this year, vendors were trying to take advantage of the shortage in stock, but most buyers were not tempted to overpay,” he says.
“New instructions are more realistically priced and there is an adjustment in existing prices.”
Andrew Giller of The Buying Solution, the buying agent, says it is acting for a number of international and European buyers from a range of countries including Greece, New Zealand, India and Turkey, with budgets from £10m to £100m, who are looking
to purchase in the traditional prime areas of
Mayfair, Knightsbridge, Belgravia, Kensington and Chelsea.
While the top end of the prime London market is still largely dominated by international buyers – with buyers from dollar and
dollar-pegged currencies still able to get a discount of 20 per cent – agents say British buyers are starting to return, too.
Bailey says there are currently lots of British entrepreneurs buying – those who have sold their companies or share portfolios and are upgrading their home. Demand from City buyers has yet to appear but with bankers’ bonuses estimated to be around £7bn this year, according to the Centre for Economic and Business Research, the appetite for trophy homes is predicted to return next year.
Giller says the family homes market is the strongest it has been for a number of years with an increasing number of UK-based clients looking to purchase family homes in the £5m-£15m price range.
The popularity of new luxury residential developments in prime central London such as The Lancasters, which overlooks Hyde Park, and One Hyde Park in Knightsbridge highlights the demand for such superprime property.
At The Lancasters, headline prices have been maintained since the launch
four months ago, says Adam Challis, head of research at Hamptons. Over half of the units have already been sold.
Challis believes the limited numbers of new prime developments being built will help prop up prices
for this portion of the housing market.