Foreign Buyers Help Keep Some Markets Bouyant

Unofficially it's been said that as many as 20-25% of buyers in the Hamptons are foreign buyers. With the strength of foreign currencies versus the US Dollar, the appreciation of the last few years has been a bonanza for Europeans. md


London’s top housing draws the world’s billionaires
By Jim Pickard in London

Published: August 25 2006 22:31 | Last updated: August 25 2006 22:31

The typical buyer of a £2m-plus home in central London is now more than likely to be a foreigner, in a sign of how international the UK capital has become.

More than 51 per cent of homes worth more than £2m ($3.8m, €3m) sold in the last year have gone to overseas buyers from Russia, the Middle East and elsewhere, according to figures from Knight Frank, the agents.

This makes London the most cosmopolitan world city in terms of property ownership.

In New York, foreign owners make up 34 per cent of sales in the prime residential market, ahead of Paris, where they account for 27 per cent.

In Hong Kong and Sydney, foreigners account for even fewer prime residential deals, at 13 per cent and 9 per cent respectively.

The data help explain how London prices have soared in the last year while the rest of the UK market has stagnated as a result of affordability issues and interest rate fears.

Prices of the most expensive homes in Kensington and Chelsea have risen more than 20 per cent since the New Year.

London was so popular because of its financial strength and its good transport connections to the US, Europe and the Middle East, said Liam Bailey, head of residential research at Knight Frank.

The change in ownership of central London streets has happened gradually. In the 1960s, British buyers still made 90 per cent of purchases, falling to 70 per cent in the 1970s, 60 per cent in the 1980s and 1990s and less than half today.

“People just want to be in London,” said Amanda Craig, director of London houses at Hamptons, the estate agents.

“In Germany there are several major cities, you might want to buy in Düsseldorf, Frankfurt, Munich, Hamburg, it’s the same in Italy, but in the UK it’s either central London or a country estate.

“Our clients aren’t interested in Manchester or wherever.”

The most expensive London homes sold in the first half of the year, a £33m house in Belgrave Square and a former office block at 100 Park Lane, were both sold by agents Savills to Middle Eastern buyers.

Even those purchases were dwarfed by that of Lakshmi Mittal, the steel tycoon, who spent £70m on an extravagant house at Kensington Palace Gardens two years ago.

The appetite of foreign billionaires for Knightsbridge real estate is being increasingly tested by ever more expensive apartments.

Candy & Candy, the brothers who designed 21 Manresa Road, which at £26m was Britain’s priciest apartment, are hoping to smash that record.

They are set to build a block of 80 flats on the edge of Hyde Park where it is understood the biggest penthouse will have an £80m price tag.

Copyright The Financial Times Limited 2006