London’s prime and super prime property market fuelled by new cadre of buyers

Created: 09 Mar 2023
London skyrise buildings

Buyers of prime and super prime real estate in the UK are increasing in scope and scale, with London a key focal point. The strength of the dollar against the pound, oil and gas prices near record highs, as well as the advent of new industries and technologies such as artificial intelligence (AI) are driving buying activity for homes priced £5 million and above.

Half of London homes above £15 million went to American buyers in 2022, according to an analysis by Hamptons. This momentum remains undiminished with Tatler reporting American activity rising between 2 and 7 per cent in the most exclusive areas of the capital. Other prime buyers include wealthy individuals from Africa, the Middle East, India, China and Lebanon. 

Oil and gas prices reached record highs in 2022, in part on account of the Russia war against Ukraine. Plus a report by Rigzone from London Oil Week indicates global oil demand will reach record highs in 2023. Further, newer wealth is being generated in tech sectors like AI, which has a global market size valued at USD 136.55 billion in 2022 and is projected to expand at a compound annual growth rate (CAGR) of 37.3 per cent from 2023 to 2030.

Wealthy buyers are taking advantage of these favourable economic and exchange rate conditions to capitalise on the opportunity to purchase safe haven assets in the UK capital. 

Wealthy, less debt-reliant, buyers have defended the value of London’s most expensive homes in defiance of a wider slowdown in the UK real estate market. New sales instructions for homes priced at £5 million or more were 74% higher in the final quarter of 2022 compared with the pre-Covid average, according to data compiled by researcher LonRes. 

UK homes’ total value hit a record high of £8.7tn per Savills data, up 5 per cent or £425bn yearly. Owner-occupiers’ share was £7tn, with 1.7tn owed as mortgage debt. Mortgage-free homeowners held a record £3.34tn. Since 2019, housing value surged by 23 per cent compared to an 11 per cent mortgage debt increase. This meant the total equity pot grew by over nine times the outstanding borrowing at £1.46tn.

“London will become a global “megacity” with a population of 10 million people, outperforming its major European competitors over the medium to long term. This prosperity is expected to boost the housing market, with price growth returning in 2025 after a two-year hiatus.”