Weathering The Brexit Storm

London’s super prime property market is weathering the Brexit storm, according to a winter 2019 market insight report conducted by Knight Frank.

Buyers spent a total of £2.06 billion on super prime properties in London in the year to May 2019, which was marginally higher than £2.05 billion in the previous 12 months.

Although overall transaction volumes fell 13% to 104 from 120, the market for properties worth £10 million plus is showing resilience in terms of demand against an uncertain political backdrop.

Tom Bill, head of London residential research, states: ‘Political uncertainty has affected sentiment over the last five years, however, this has intensified as the UK’s intended departure from the European Union continues to be discussed, combined with the impact of wider global economic tensions,’
‘However, higher value sales are increasing, as high net worth individuals target London and take advantage of the weak pound,’ he added.

The report also highlights that the market is getting younger, stating that 73% of super prime buyers were below 50 in the year to September 2019, which was up from less than half at the start of 2015.

There were 16 transactions above £30 million mark that took place in the year to May 2019 compared to 11 over the previous 12 months.

Meanwhile, the ratio of new prospective buyers to new sales listings above £10 million climbed to 6.5 in the third quarter of 2019, the highest figure since the first quarter of 2014.

‘Beyond Brexit, there are global trade and geopolitical tensions that mean other super prime residential markets have slowed. While there are fewer discretionary buyers in London, well-priced and good quality stock is seeing strong interest and leaves me convinced that demand will accelerate once Brexit has been resolved,’ said Rory Penn, joint head of Knight Frank’s Private Office .

Victoria Garrett, head of residential, Asia-Pacific at Knight Frank, has observed that there is a strong appetite for the London market from buyers in Asia. ‘A combination of the currency discount, relative political stability and a world class education system means London is the logical choice for many buyers at the super prime level,’ she said.

Garrett continues, ‘When more clarity around Brexit emerges and there is more currency stability, much of the pent-up demand will be released’.