Despite international travel restrictions, demand has continued to build from around the world and far exceeds supply.
There are signs that the super-prime (£10 million-plus) sales market in London is recovering after 12 months during which activity was curbed by the global pandemic. Transaction levels and spending are rising as the UK’s successful Covid-19 vaccination programme gathers pace and expectations grow that travel rules will be relaxed in coming months.
Transaction volumes rising
In the six months to the end of April, £817.4million was spent on London super-prime property, 21% higher than the figure of £677.9 million recorded during the preceding six months. There were a total of 45 super-prime deals in the six months to the end of April, compared to 43 transactions in the preceding six month period.
Leading global property consultancy Knight Frank recently reported that buyers from the Middle East are playing a more active role in the UK property market, accounting for 16% of all UK real estate purchases sold to overseas buyers in the first three months of this year. This is the highest proportion of Middle Eastern interest since the outbreak of COVID-19 in the UK. And whilst Middle Eastern investment is still some way off pre-COVID levels, activity is expected to tick up further as international travel restrictions ease.
Henry Faun, Partner, Private Office Middle East at Knight Frank comments, “From the Middle East we are seeing pent up demand for London’s Super Prime property we hope will be released as travel opens. The volumes of our enquiries for £10m+ properties throughout central and outer London have lifted in recent months”.
Based on the 12-month rolling average, in May 2021 there were 8.7 new buyers for every new super-prime property listed for sale. This was the highest figure in 7 years and in parallel, average super-prime prices increased 0.6% in the year to May, which was the first rise in more than three years
Liam Bailey, Knight Frank’s global head of research comments: “The London super-prime market is seeing a surge of interest. Purchasers with a combined budget of £36.8bn are actively searching for £10m+ properties right now, representing a rise of 54% compared to the five year average. A combination of lockdown easing, a rapidly growing economy, sharply improved business sentiment, and a sense that city living is being reignited after a long close-down is helping to drive buyers. While the figure represents a growth in new demand from new UK and international buyers, there is also a growth in demand from existing luxury home owners looking to buy a new, bigger, better, super-prime home to improve and expand their London base, as a response to Covid’s impact on their lifestyle.”
Where are super-prime deals taking place?
The highest percentage of super-prime exchanges in the 12 months to April took place in Kensington (18.6%). The joint top locations in the previous 12 months were Knightsbridge and Mayfair (17.4%). Notting Hill has also grown in popularity, recording 10.5% of all super-prime deals over the last year, up from 5.4% in the previous 12-month period.
Changing shape of demand
The percentage of super-prime sales that were houses was at its highest level in five years. Almost three-quarters of transactions were houses, compared to a split that was closer to 50/50 between apartments and houses in 2017
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