Prices of the most expensive homes in London will probably rise by up to 10 percent in 2011, as foreign buyers compete for a limited number of available “super-prime” properties, said London-based property adviser Knight Frank.
Prices of homes and apartments costing over £10 million climbed eight percent in 2010, said Knight Frank in a report.
“There have been a number of very significant sales in the first few weeks of the year, which point to the depth of wealth which is looking to buy into the top end of the London market,” said Knight Frank. Home buyers from 50 different countries acquired homes through the brokerage in 2010, up from approximately 30 in 2008, it added.
London’s super-prime market is drawing international investors aiming to protect their wealth from political or financial volatility at home, it said.
Knight Frank’s brokers predict that buyers from Russia and other former Soviet republics will improve their market share from last year’s 14 percent. Indian and Chinese buyers are also likely to boost their share of ownership, while instability in the Middle East will create demand from the region.
“With inflation rising in Asia, the desire to add tangible assets to wealth portfolios is proving itself to be a key driver of demand,” said the report.
The financial crisis made it more difficult for luxury home developers to fund projects, limiting the number of available new high-end residences.
London’s status as the most desirable market in the world may be hurt by the “popular backlash against wealth”, said Liam Bailey, Head of Residential Research of Knight Frank, in the report.
Increased competition from Asian cities such as Singapore and Hong Kong may also challenge London’s status as the top global financial centre, said Mr. Bailey.