There has been a noticeable increase in demand for the top end of London’s prime housing market, as wealthy overseas investors take advantage of the weak UK pound.
London’s ultra-prime housing market for multi-millionaire and billionaire buyers has risen by 30% during 2022 – over the last 2 years there has been a total of 92 sales for luxury properties priced at more than £15m with 52 sales in 2022 compared to 40 in 2021 and 17 in 2020 – London’s super-rich buyer market is set to remain buoyant during 2023 driven by buyers from the USA, Europe, India, and the Middle East. This new survey by Beauchamp Estates shows that interest remains in this ultra-prime property market.
The findings show that during parts of 2022 London’s super-top-end property transactions had been driven by buyers from the USA, because the strength of the US dollar against the GBP Pound is giving them an effective 30% discount on their cost of purchasing property in London.
The report estimates that during 2022 50% of the transactions in Prime Central London for homes valued over £15m had been to USA buyers, purchasing around £620m worth of luxury property; with Swiss, French, Indian, and Middle East buyers being the other key acquirers of luxury homes in London during the last 12 months.
Rising interest rates have increased cash purchases by over 60% for those transactions more than £15 million, a significant shift from 2021 and 2020 when most of the deals were funded by advantageous interest-only “super-prime mortgages”.
The latest 2022 edition of the annual Billionaire Buyers in London survey by Beauchamp has looked at the sales of luxury residential properties that are valued over £15m for the whole of 2022, compared to 2021 and 2020, analysing deals data from LONRES. This data has been combined with wealth data from Credit Suisse and Forbes, and the agency’s own in-house deals data and local market intelligence.
The survey shows that between January 2021 and December 2022, there have been 92 sales of Prime Central London homes priced above £15 million – over £1.97bn worth of property sold – with 2022 accounting for £1.23bn worth of sales compared to £773m in 2021 and £553m in 2020. In just three years London’s billionaire property transactions have more than doubled in size.
Over the last two years, London’s super-rich homes transactions have achieved £3,259 per sq ft on average with the highest in 2022 hitting £10,000 per sq ft in Belgravia. There is a significant price premium for newly built or newly refurbished dressed turn-key homes with concierge and lifestyle amenities with £15m plus deals such property achieving average values of £6,666 per sq ft over the last 12 months.
The number of mansions and townhouses priced above £15m which have sold in Prime Central London Locations has risen for the third year running with 36 sold in 2022, compared to 27 in 2021 and 11 in 2020. Such billionaires’ houses being 9,292 sq ft in size on average, with seven bedrooms, a private cinema, health spa, swimming pool, and generous garden.
The number of ultra-prime apartment and penthouse sales have also increased, with 12 £15m plus deals in 2022, compared to 10 in 2021 and six in 2020. Such apartments and penthouses have on average been 6,144 sq ft in size with four-bedroom suites and large private balconies and terraces.
The 2021-2022 deals data shows that for London homes priced above £30m buyers are looking for mansions/grand townhouses between 10,000 sq ft to 30,000 sq ft in size complete with gardens and 6,000 sq ft plus penthouses with private roof terraces.
Over the last 12 months, the SW1 postcode (Belgravia/Knightsbridge) has been London’s top address for ultra-prime sales, accounting for 17 (32%) of the 52 £15m plus deals (up from 15 in 2021), followed by the W1 postcode (Mayfair) with 15 deals (up from 11 in 2021).
Other key addresses for £15m-plus sales during 2022 include St John’s Wood (NW8) with seven deals, with Hamilton Terrace and Avenue Road being the area’s most sought-after addresses, Kensington with four deals, Chelsea with four deals, Hampstead with two deals, Notting Hill with two deals and Regents Park with one deal.
Beauchamp highlights that war, the pandemic, and sluggish markets have caused turmoil for the world’s billionaires during 2022. This year there are 2,668 billionaires around the world – 121 fewer than in 2021 – worth a collective £10.36trn, £326bn less than in 2021.
The key drops in billionaire wealth have been in Russia, where there are 34 fewer billionaires than in 2021 following the Russia-Ukraine war and sanctions, and China where tech and real estate industry problems, Covid lockdowns, and government crackdowns have led to 87 fewer Chinese billionaires.
Beauchamp revealed that during 2022 there have been no truly significant Russian Oligarch purchases and only a few Chinese top-end residential real estate purchases in prime central London.
It says that global uncertainty and the underperformance of alternative investments has driven many multi-millionaires and billionaires to return to investing in London real estate as a proven safe haven and stable asset class. Therefore, despite the drop in billionaire wealth, London has bucked the trend. The UK now has 177 billionaires, up six from 2021, they have a combined fortune of £653bn, with 120 owning one or more homes in London.
The most dramatic rise in billionaire numbers has been in the USA, where there are now 735 billionaires worth £3.83trn. American wealth creation, combined with the USA-UK exchange rate, has resulted in the wave of American luxury home buyers in London over the last 12 months.
During 2022 Continental Europe has seen a 22% jump in billionaire wealth and there are now 111 billionaires in Switzerland worth £296 billion, 68 in France worth £240bn and 68 in Italy worth £169bn, all these countries have seen buyers purchasing £15m-plus homes in London over 2022.
Looking at how London’s super-prime residential market will perform in 2023 Beauchamp forecast that for properties priced above £15m values will either remain flat or rise slightly by 1% or 2%, a result of global economic slowdown and rising interest rates.
They forecast that during 2023 the volume of deals for homes priced above £15m is likely to rise by 30% compared to 2022, driven by wealth creation in three locations – the USA, Europe, and the Middle East.
During 2023 the leading buyers of £15m-plus homes in London will be from the USA – in a repeat of 2022 they will again dominate the deals – followed by buyers from Europe (Swiss, French and Italian) and the Middle East (notably the UAE, Saudi Arabia, and Qatar).
Beauchamp highlight that high oil and gas prices have generated huge excess cash reserves in the Gulf states. There are now 45 billionaires in the United Arab Emirates worth £404.4bn – equivalent to the billionaire wealth of France and Italy combined. There are 71 billionaires in Saudi Arabia worth £1.256trn – equivalent to the combined billionaire wealth of the UK, Switzerland, France, and Italy.
Gary Hersham, founding director of Beauchamp Estates, said: “During 2022 the volume of £15 million-plus deals in London’s ultra-prime housing market has risen by 30% compared to 2021, the landscape dominated by American buyers undertaking cash purchases and capitalising on the strength of the US Dollar against the Pound Sterling which has given them an enormous price discount and paid for Stamp Duty and moving in fees”.
“During 2022 there has effectively been one billionaire buyer property deal per week in Central London with war, pandemic, and the sluggish performance of alternative investment markets driving multi-millionaires and billionaires to return to investing in London residential real estate which is a proven safe haven and stable asset class.”
Topics:UK Property, Real Estate Market, Market Trends, Rents, Demand, Investment Strategies, Overseas Investors, Short Term Lets, Yield, ROI, Return on Investment