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Old Money Fuels Superprime London

10.07.22

As schools started to break up so news broke that an ultra-high net worth Lebanese buyer had made what will be one of the landmark deals of the year, picking up a five-bedroom house in Cadogan Gardens, Knightsbridge, for a cool £19.75m.  The deal is symbolic. Not only of a revival of buyer interest in prime central London, of which more later, but of the profile of super prime buyers.

With cryptocurrencies crashing and world stock markets tumbling, so hedge funders, bankers, and tech entrepreneurs are finding themselves a little short on capital to splash on trophy homes.

Cue the return of what Camilla Dell, managing partner of Black Brick, describes as “old wealth” – buyers whose finances are tied up in oil and gas, and who are amongst the few beneficiaries of the current cost of living squeeze, as well as those whose income is paid in USD($) who are seeing their spending power increase as the value of GBP(£) continues to contract on the back of the UK’s falling GDP and contracting economy.

“It has reminded me of just before the last financial crash, where people were very nervous about buying into the financial markets, but were very, very happy to invest in bricks and mortar,” said Dell, whose firm has just been named best property adviser in the prestigious Wealth Adviser awards. “Missing from the market are private equity and hedge fund buyers, as well as tech buyers, but they have been replaced by old fashioned money.”

The Time Has Come For Prime

It has been a rough few years for prime central London, with tax rises, political and economic uncertainty, Brexit, and the pandemic. But prices and sales volumes are finally starting to pick up in this most rarefied of markets.

According to Knight Frank the number of new instructions in May was the sixth-highest figure in a decade, indicating the supply chain is opening up. Meanwhile the number of new prospective buyers registered by the firm, as well as the number of offers accepted, was the third-highest figure in a decade.  Almost inevitably increased activity is starting to be reflected in price growth.

Data from London Central Portfolio, the investment expert, found that prices in prime central London today are 1.2 per cent higher than they were in the early days of the pandemic May 2020, although they are still 7.9% below average prices at the peak of the market in 2015

“There has definitely been a resurgence in clients buying central London apartments,” said Dell.  “Typically, they are North American, Australian, African, and Middle Eastern buyers, and they are looking for a second home or holiday home, often however with an extra factor like work, business, or education.”

These buyers have healthy budgets – circa £2m to £10m – and what they want is an old school prime central location encircling Hyde Park. “It has been a really big change,” said Dell. “Eighteen months ago, this market was like tumbleweed. At least half of our buyers at the moment are looking for prime central London flats. At the start of the pandemic nobody wanted one.”

www.black-brick.com

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