London luxury-home prices rise at record pace

Published April 12, 2007

London luxury-home prices rise at record pace

(EDINBURGH) Luxury-home prices in London rose at a record monthly pace in March as Russians and Middle Eastern buyers competed for a smaller number of properties with financiers from the City of London, real estate broker Knight Frank LLC said.

The average price of the UK capital's most expensive houses and apartments increased by an average of 3.1 per cent last month from February, according to data compiled by Knight Frank. The annual increase was 32 per cent, the highest in 28 years.

'The continued strong performance can be explained by supply shortages and ongoing international demand now that City bonus money has been paid out,' said Liam Bailey, head of residential research at Knight Frank, in an interview.

The average price of a luxury house in Knight Frank's monthly index is now almost £5 million (S$15 million), with apartments costing £2.5 million. A typical house has appreciated by 100,000, or about four times the average annual UK wage, each month over the past year.

Prime residential property prices in the UK capital have now risen for 27 consecutive months. In the first quarter, house prices rose by 10 per cent and apartments by 7.5 per cent. Chelsea, favoured by bankers, and St John's Wood continue to perform well, said Mr Bailey.

Luxury-home prices in London are rising about three times as fast as UK house prices generally. Home prices rose 11.1 per cent in the three months to the end of March from the same period a year earlier, HBOS plc, Britain's largest mortgage lender, said on April 5.

The most expensive homes in London, or 'super prime' properties such as the Hyde Park luxury apartment complex project that is managed by Candy & Candy Ltd, are being pre- marketed with price tags of about £4,500 a square foot, according to newspaper reports.

In New York City, the most expensive apartments bordering Central Park sell for close to US$7,000 a square foot.

Sheikh Hamad bin Jassim bin Jaber al-Thani, the prime minister of Qatar, last month paid a record £100 million for the highest and biggest penthouse in the Candy & Candy Hyde Park development, according to the London-based Times.

Russians account for 21 per cent of all buyers paying at least £8 million for London homes, said Mr Bailey. Middle Eastern buyers account for another 13 per cent. Britons buy 37 per cent of such properties, he said.

Roman Abramovich, Russia's richest man and owner of Chelsea Football Club, spent £49.3 million buying six properties in London between June 2005 and August 2006, according to the Daily Mail.

Other international business people including Lakshmi Mittal, chairman of the world's largest steel company, and brewing heiress Charlene de Carvalho-Heineken have bought property in London in recent years.

For houses worth more than £3 million, UK citizens account for 40 per cent of purchases. - Bloomberg