Luxury-home prices in central London climbed the most in nine months this month as the increasing risk of a global recession prompted investors to seek a haven for their wealth.
According to real estate consultancy Knight Frank, the values of houses and apartments costing an average of £3.7 million (S$7.28 million) rose 10.5 per cent in the 12 months through August.
“There’s a lot of money out there looking for a home,” said Knight Frank head of residential research Liam Bailey.
He added that London’s luxury-property market has not been impacted by the United States debt crisis, euro-zone debt crisis or the financial market turmoil.
The pound’s weakness is also making luxury real estate in London more affordable to overseas buyers, Mr Bailey noted. The United Kingdom currency has lost about 20 per cent against a basket of nine other developed-market currencies since the property market’s previous peak in March 2008, as measured by Bloomberg Correlation-Weighted Indexes.
Not surprisingly then, the number of prospective buyers viewing prime central London properties increased 23 per cent in the three months through July, while the number of homes for sale rose 13 per cent, Knight Frank said. The company did not give comparable numbers for the two periods.
Mr Bailey also believes that prime central London real estate is reflecting the security that gold is offering investors. “If they think that gold is one beneficiary, it looks as if London property is one of the others,” he added.
And Knight Frank pooh-poohed the effects of the recent London riots.
“The riots seem unlikely to dent most international buyers’ desire for property in the city,” Knight Frank said. The broker predicted that luxury-home prices will increase by as much as 12 per cent this year.
Source : Today – 31 Aug 2011