London's super prime residential tops world luxury market
Diverse investor profile underpins London’s resilience
London’s super prime market continues to draw more international interest than any other city, as wealthy investors from all corners of the world are turning to the UK to invest up to $8,800 per sq ft.
The prime market in London has boomed recently, as property prices have increased 12.6 per cent so far this year alone and higher quality housing is available in a greater number of boroughs. Prime values are now being achieved at schemes such as The Tower in Vauxhall and Fitzroy Place in Fitzrovia. But the super prime market is by nature limited to a sphere of ‘golden postcodes’. As the wealthiest investors narrow their search, there is greater pressure for super prime properties to include panoramic views of park, river or cityscape, making only a finite number of areas capable of achieving super prime values.
Mark Collins, Head of Residential, CBRE, said:
“Global economic uncertainty is fuelling the success of London’s super prime property market, as investors look to spread risk by diversifying their portfolios. London is very much the port in the storm, as wealthy investors around the world appreciate the capital’s stability when compared with other markets. In addition to overseas funding, London’s super prime market continues to be buoyed by strong domestic investment.”
Where London’s buyers are coming from:
North Americans look to London as their preferred European location for diversifying their portfolio. They tend to favour central West End territory – Mayfair and Covent Garden, as well as Knightsbridge, Kensington and Chelsea. Typical investment value is £2m - £5m, and occasionally up to £10m.
UK buyers are more comfortable with looking outside the ‘golden postcodes’ and see the opportunity in traditionally less prime areas, such as South Bank, Fitzrovia and the City. They will spend more at good quality schemes they know to be unique ‘one offs’, in locations they know will have very limited development – Fitzroy Place, for example.
There is increased activity from Dubai, UAE and Saudi Arabia, although capital will have often originated from countries such as Syria or Bahrain.
As the future of the Eurozone remains uncertain, Greeks and Spaniards are looking to re-route capital into more secure locations, typically focused on the £2m - £5m bracket. The change in Government in France and subsequent tax implications has increased London’s appeal in the eyes of French high net worth individuals, who tend look to areas such as South Kensington and Fulham, driven by the Lycees. Turkey could also turn to London in the future.
London continues to draw in Russian billionaires. Travel time from Moscow to London is a mere four hours, making London more attractive than a city like New York. Russian buyers are more extravagant than other investors and will seek the most unique trophy property available. Quality of architecture, views and security are all key factors. It’s not unusual for them to spend well in excess of £10m.
CBRE believes there is an emerging market from the former Soviet states, in particular Kazakhstan and Uzbekistan. Pakistani investors are also showing increasing interest in London, as their economy declines and currency devalues. These buyers will look in central areas, although aren’t strictly tied to certain streets or postcodes; the aim is low-risk.
India has a good supply of prime property, but its wealthy residents look to London for super prime property. Most are driven more by product than location, and are drawn to unique, exclusive properties, generally in the £5m-plus market. Although yields are important, the investment tends to be a more personal decision.
South East Asia
New build London developments sell well in off-plan exhibitions, typically in Singapore, Hong Kong and Kuala Lumpur. New markets are also emerging in mainland China, Bangkok, Vietnam and Indonesia. Hong Kong and Singapore buyers have a highly detailed knowledge of London, and are open to ‘new’ prime growth opportunities like Canary Wharf. An increasing number of investors from Thailand are looking to spend over £1m, most without financing. Children’s education is a key factor for these buyers, as number of students coming to the UK from Asia increasing over 50 per cent in the past four years. China shows the most pronounced increase of students in the UK – 62 per cent.
Date: 07/02/2014 | Source: Property Reporter
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