Billionaire Buyer Boom

Abode2 reports on how the billionaire buyer market in London doubled during 2021 and is predicted to continue to flourish in 2022, according to a recent Beauchamp Estates Survey

Prime Central London’s super-prime housing market for multi-millionaire and billionaire buyers doubled in size during 2021 – over a two year period there has been a total of 49 sales for luxury properties priced over £15 million with 32 sales in 2021 compared to 17 sales in 2020 – with London’s super rich buyer market set to boom during 2022 driven by Russian and Chinese buyers says a new survey by Beauchamp Estates.

Beauchamp Estates say that the surge in London’s billionaire property deals is due to the huge accumulation of wealth that billionaires have enjoyed over the last 12 months combined with the availability of highly advantageous interest-only “billionaire mortgages” which has triggered a massive “buying spree” of luxury homes in the UK capital, which is set to continue in 2022. The 2021-2022 deals data shows that super rich buyers are looking for London mansions/grand townhouses providing no less than 10,000 square feet of living space, and in some cases upwards of 30,000 square feet of accommodation, complete with gardens and 6,000 square foot plus penthouses with private roofterraces.

The new Billionaire Buyers in London survey by Beauchamp Estates has looked at sales of luxury residential properties valued over £15 million between January 2020 and December 2021, analysing deals data from LONRES combined with the agency’s own in-house deals data and local market intelligence.

The Beauchamp Estates survey reveals that between January 2020 and December 2021 there have 49 sales of PCL homes priced above £15 million – over £1.29 billion worth of property sold – with 2021 accounting for £773 million worth of sales, significantly up on 2020. Over the last two years London’s super rich homes deals have achieved £3,221 per square foot on average with the highest in 2021 hitting a reported record £11,000 per square foot.

The number of mansions and grand townhouses priced above £15 million that have sold in PCL has doubled, with 20 sold in 2021, compared to 11 in 2020 with a London billionaire’s house being 9,384 square feet in size on average, with seven bedrooms, a private cinema, health spa, swimming pool and generous garden.

Super-prime mega-apartment and penthouse deals have also risen, with nine £15 million plus deals in 2021, compared to six in 2020 with the apartment/penthouse being 6,128 square feet on average with four bedrooms and large private balconies and terraces.

Over the last two years the SW1 postcode (Belgravia followed by Knightsbridge) has been London’s top address for super-prime sales, accounting for 14 deals, followed by the W1 postcode (Mayfair) with 10 deals. Key SW1 addresses for super-prime deals have included One Hyde Park, Wilton Crescent, Eaton Square and Grosvenor Crescent. Beauchamp Estates sold a £21 million duplex and mews on Eaton Square to an American billionaire and a £45 million townhouse on Grosvenor Crescent to a Hong Kong billionaire. Key W1 addresses for super-prime deals include Hill Street, Upper Grosvenor Street and Grosvenor Square.

Beauchamp Estates say that the top-5 super-prime buyers ranked by country of origin are Chinese billionaires, followed by Indians, then American billionaires, Russians, and domestic UK buyers. Other significant buyers include multi-millionaires from Africa (Nigeria, South Africa and other mineral resource rich states).

The report also seems to estimate that 40% of the multi-millionaire and billionaire buyers in London are self-made whilst the rest benefit from family or inherited wealth. Over the last 24 months a key trend has been the relative youth of these purchasers, with many of the buyers for £15 million plus properties being in their late 20s or early 30s.

Furthermore, it highlight that over the last 12 months the relative youth of this new generation of super rich buyers has led many of them to purchase property outside of the traditional Knightsbridge, Belgravia and Mayfair addresses.

Revealing that Notting Hill has become a key location for young multi-millionaire buyers, with £15 million to £20 million houses being purchased for values up to £3,800 per square foot (a price record for the locality) in addresses such as Elgin Crescent, Clarendon Road and Kensington Park Road. Another emerging location for super-rich buyers is Bayswater overlooking Hyde Park, here Beauchamp Estates has recently sold a £40 million mansion to a young Russian billionaire and super-luxury apartments have sold at Fenton Whelan’s Park Modern development for over £5,000 per square foot, a price record for homes on the northern boundary of Hyde Park.

Whitehall has also had a flurry of super-prime deals with a buyer recently reported to have paid a record £11,000 per square foot to purchase a four bedroom duplex in the Old War Office and a penthouse at the Corinthia Hotel Private Residences wing selling for £39.5 million.

Beauchamp Estates highlight that the boom in on-line retailing, virtual meetings and transactions and computer games/video has meant that over the last 12 months the UK now has a record 171 UK billionaires, 24 more than in 2020, the biggest jump in 22 years. Their combined fortune is £597 billion, a jump of 22% on 2020.

The findings suggest that the UK’s relatively low interest rates have enabled most of London’s super-prime property deals over the last two years to be transacted using asset-backed “billionaire mortgages”. Using other assets or company shares as collateral, these “billionaire mortgages” are typically 30-year term interest-only mortgages, with a preferrential 1% to 2.5% interest rate, often up to 100% of the value of the property.

These terms result in the mortgages not having to be paid-off unless the home is sold, or if the property is inherited the next generation can enjoy a comparable loan. The money saved can then be used for other investment opportunities.

Looking at how London’s super-prime residential market will perform in 2022 Beauchamp Estates forecast that for properties priced above £15 million values will rise by 5% to 7% - the biggest jump for over a decade – due to the huge wave of demand driven by cheap lending and the continuing lack of supply.

The report also states that the volume of deals for homes priced above £15 million has the potential to double again during 2022 – just as it has in 2021 – with around half a dozen homes valued at up to £100 million scheduled to be listed for sale during 2022.

Concluding that during 2022 Russian buyers are likely to leapfrog up the rankings and overtake the Chinese as the lead buyers of super-prime homes in London, this flight of capital driven by worries that the escalating Russia-Ukraine border conflict could result in Russia and its elite being hit by economic and financial sanctions driven by the USA.

Gary Hersham, Founding Director of Beauchamp Estates says: “During 2021 the volume of £15 million plus deals in London’s super-prime housing market doubled, driven by super rich buyers having access to a plentiful supply of preferential-rate interest-only “billionaire mortgages” which has enabled them to borrow at rates below the rate of inflation, essentially borrowing for free. Over the last 24 months there have effectively been two to three billionaire buyer property deals per month in Central London which underlines that the capital’s luxury real estate market is the best place in the world for the super rich to store their wealth. Each decade the property asset increases in value, and the buyer has the additional benefit of visiting London for shopping, fine dining, leisure, the arts and entertaining friends and family.”

Marcus O’Brien, Director at Beauchamp Estates Private Office says: “2022 has the potential to be the best year in the last decade for London’s super-prime housing market, especially for mansions, newly built homes and refurbished houses. Russians are likely to overtake the Chinese as the leading buyers of super-prime homes in London the flight of capital from Moscow driven by worries over US sanctions because of the escalating Russian-Ukraine border dispute. London real estate is a stable safe haven to invest global wealth in an increasingly turbulent and uncertain world.”

Jeremy Gee, Managing Director of Beauchamp Estates says: ”The multi-millionaires and billionaires buying trophy houses and penthouses in London are getting younger and have self made wealth. This new generation of super rich buyers, many in their 20s and early 30s, want value-for-money alongside luxury and because they are not postcode snobs are happy to purchase beyond the boundaries of SW1 and W1 which is why during 2021 the super-prime sector witnessed major deals being done in locations such as Whitehall, Baywater, Soho and Notting Hill. During 2022 we are likely to see billionaire buyer deals again being done in emerging prime residential addresses, not just in established locations like Belgravia.”

www.beauchamp.com