London’s Super-Prime Comeback

London’s super-prime property market has just posted its best 12 months since the Brexit vote, confirms Abode2. Wealthy buyers splashed £3.1bn on 161 properties worth £10mn or more in the year to March. That compares to £2.5bn and 144 transactions in the previous 12-month period. You have to go back to 2015/16 to find a higher sales tally at this level (164), but the spend was still some way behind the bumper total of £4.3bn recorded across 227 transactions in 2014/15.

The all-market analysis confirms Kensington as the hottest super-prime market in London, with 26 £10mn-plus deals over the year, followed by Belgravia (25) and Mayfair (22). 67% of the sales recorded were houses, compared to 70% in the year to March 2022, when lockdown restrictions ramped up the demand for space. In the 12 months before the pandemic, 60% of transactions were houses.

A declining number of luxury new-build flats coming to the market is expected to keep the ratio of house sales relatively high. The number of units consented to, under construction or delivered every year in developments where the blended value is £3,000 per square foot and above will fall sharply over the next five years. A figure of 1,364 in 2022 compares to just 146 by 2027. Levels of supply and demand were both strong in the first quarter of 2023, compared to the five-year average. The number of new prospective buyers registering above £10mn was up by 15%, while the number of properties coming to the market for sale increased by 11%.

Demand was boosted as international travel resumed from many parts of the world last year, said KF. US dollar-denominated or pegged buyers still benefit from an effective discount of 37% in PCL compared to July 2014, when the movement of the pound and property values are combined. Average prices above £10mn have been “relatively flat”, rising by just 0.5% in the year to March – the same increase recorded in the three years since the pandemic first struck in March 2020.