Prime London property boosted by overseas buyers

The weak pound has made property in prime central London even more enticing to foreign investors seeking safe havens and will continue to do until 2018, according to Knight Frank’s London Residential Review.

Prime Central London residential property prices rose 0.7% in April, and have been rising now since November 2010. Much of this rise is underpinned by the demand from overseas buyers who accounted for 52% of all £2m+ homes sold in prime central London (PCL) between March 2012 and March 2013.

With the pound entering a renewed phase of weakness we have examined the impact of currency arbitrage in our summer review of London’s prime residential market. In the report we provide a detailed assessment of recent and future implications on relative pricing for international purchasers.

Currency discounts

In sterling terms, property prices in PCL now stand 17% above their previous March 2008 peak. However, taking into account currency fluctuations, prices for prime London homes for individuals purchasing in US dollars are 11% below their March 2008 level.

For euro-denominated buyers, prime central London homes have risen 9% since 2008.

As the US emerges from the recession in better shape than most developed economies, the dollar is expected to benefit. A string of upbeat economic data and an anticipated end to quantitative easing should ensure the dollar continues to strengthen against the pound and euro over the next five years.

Indeed, our research, which takes into account EIU currency forecasts and our own predictions for prime central London property, shows that by 2018 prime central London property prices will have risen 20% in US dollar terms. In contrast, prices will rise 26% in GDP terms.

As a result, entry to the prime central London property market will become more affordable for dollar-denominated buyers and for those whose currencies are pegged to the US dollar.

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  1. Pingback: DominicFarrell: Prime London property boost http://t.co/XzbMvJ2fPk « @dominicfarrell « Uk Property Twitter Experts « LandlordZONE News

  2. Lupe Cain

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    Research by the capital’s top estate agents shows that prime central London prices have jumped 48.4 per cent since the low point of March 2009. With values at a record high, even moderately rich buyers are finding they cannot afford to live in the best postcodes. So they are searching for better-value areas where they can get more (sometimes much more) for their money.This has triggered a domino effect: the influx of new buyers to an area is driving up prices beyond the previous level, while sellers are seizing the opportunity to pocket a profit and invest in another up-and-coming area.Equity coming out of prime central London is finding its way to neighbouring central districts such as Primrose Hill and inner suburbs such as Wimbledon .

  3. Nora Merritt

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    Why invest in the prime central London? The prime Central London residential market is a micro market within the UK property sector that is driven not by the domestic economy but by macro global economic and political factors. It is fuelled by wealthy international investors. Historically it has outperformed more traditional long term equity investments and it is not so easily affected by sudden market fluctuations as stock markets. London continues to be a global financial centre and an international destination for both tourism and business.

  4. vscott8

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    The UK as a whole is definitely recovering from a tough 2009. Most businesses around the country are starting to recover and their employees are starting to have a little bit more money to spend each month due to a general drop in retail prices. However the unemployment rate in the UK is still continuing to rise which means just because companies and their employees have a little more money, jobs are still scarce as companies are hesitant to start hiring too soon. The unemployment rate is one of the major factors that affects London property prices and will have a slight negative effect on London property prices. For those interested in investing in either commercial or residential properties in the area plazaestates.co.uk is a reliable and reputed real estate agency to get in touch with.

  5. Pingback: Prices rise, but buyers are becoming more value sensitive | Global Briefing

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