Knight Frank’s Super-Prime Autumn 2020 Market Insight –
for the London super-prime property market shows more money has been spent on £10 million-plus properties this year than 2019, despite the global pandemic.
The year began strongly after a decisive general election result marked a turning point after several years of Brexit-related political volatility. There were 30 transactions above £10 million in the first three months of 2020 compared to 18 in 2019 and 22 in 2018.
Despite the dip in the middle of the year, there were a total of 56 super-prime deals in the first eight months of this year, compared to 57 last year. Furthermore, a total spend of £1.13 billion in the first eight months of 2020 was 16% higher than the figure of £977.5 million recorded last year.
The trend for more outdoor space has benefitted suburban and country markets but buyers are retaining a London investment for the long-term. Prices are robust with single-digit percentage discounts but no more. This demand for outdoor space meant houses have become much more popular, with 66% of the £10 million-plus deals seen in 2020 so far being houses, rather than flats.
Demand for London property has risen within the Middle Eastern buyer demographic, as the UK’s education and legal system looks very attractive on a global basis and Education remains a crucial driver of demand and COVID-19 means families have brought forward plans to educate their children in the UK.
Area focus:
• Kensington accounted for 14.3% of all super-prime deals between January and August 2020, the highest proportion of any London area. In the same period in 2019, the highest was Mayfair, which accounted for 24.6%.
• The demand for outdoor space has seen increased activity in the family house markets, especially in areas like Notting Hill, St Johns Wood, Hampstead and Belgravia. Houses accounted for 66% of sales over £10m between January and August 2020 (fig. 1)
• Marylebone is now the second most expensive area of London on a £psf basis, rising from 7th in 2018
Henry Faun, Partner, Head of Private Office, Middle East said; "Our clients throughout the Middle East continue to favour London as their preferred destination for a second home. Whether their interest be for a holiday home, children’s education, or investment; both central and outer London are highly sought after. Despite the lockdown, Middle Eastern demand for both houses and apartments in London is resilient".
Rory Penn, Head of Knight Frank’s Private Office commented, "Large discounts are not available despite the pandemic. Vendors are resilient, debt is cheap and banks are not calling in loans. Prices, for now, don’t feel like they have much further to fall after the declines of recent years. It doesn’t appear that another 10% is about to come off overnight. The number of deals in 2020 compared to last year underlines the liquidity and resilience of the market."
Tom Bill, Head of UK Residential Research at Knight Frank commented, "The final quarter of the year will be marked by uncertainty as the UK government seeks to contain the pandemic. Brexit and the US elections will have an impact on currency movements but the relaxation of travel restrictions will be the key factor affecting transaction volumes."