Competition from Dubai and concerns about the Labour government’s tax and spend priorities have led investment in London’s super prime property market to dry up, as the world’s super rich look to buy smaller homes for less money.
A new analysis, which looked at sales of super prime residential homes valued over £15m between between January and the end of June, found just £731m of deals were inked compared with £829m over the same period last year.
This was despite the fact that the number of deals for homes above £15m in London stayed similar in the six months to June 30; nudging up from 45 to 46 year on year.
The sector’s struggles were largely attributable to a dramatic drop off in investment in ‘prime central London’ (PCL) homes, as onlookers wait to see the policy environment over which the new Labour government is likely to preside.
Whereas in the first half of 2023, £210m was spent by investors and buyers looking to refurbish and resell or buy-to-let super prime properties, that figure fell to just £64m.
This, said Beauchamp Estates, the prime property dealership that compiled the research, was largely down to many prime property developers and landlords being enamoured by the buoyant prime market in Dubai.
The emirate is now home to more transactions on homes over $10m (£7.71m) than anywhere else in the world.
In London last year, the average square footage of all the homes that sold London for plus £15m was 11,200 sq. ft.
This year, the size of super prime homes that changed hands shrunk dramatically, down 4,000 sq. ft. to just 6,500.
The same was the case with apartments, according to the research which combined Beauchamp Estates’ own numbers with data from LonRes. The average size of a luxury apartment that changed hands for over £15m in the first half of this year was 4,844 sq. ft., a major downgrade from the 2023 average of 7,380 sq. ft.
Paul Finch, director at Beauchamp Estates, said: “During the first half of 2024 multi-millionaires and billionaires have downsized their residential real estate investments in London.
“In 2023 ultra-wealthy buyers purchasing homes in London valued above £15 million were acquiring large ‘main residence’ houses and mansions in the £25 million to £40 million plus price range and there were several purchases for mansions priced over £100 million in Regent’s Park and Mayfair.
“This year the highest demand and majority of sales have been in the £15 million to £25 million price range, driven by American and Middle East buyers who have been purchasing spacious pied-a-terre apartments ideal for occasional stays.”