Welcome to Lees Associates’ regular look at the trends in the prime residential market, compiled from a selection of London’s leading real estate professionals and property experts. Please visit contributor websites for more information. In this edition we look at:

Why London still commands the highest premiums per square metre.
The highs and lows of London’s prime property market
Why wealthy buyers are looking for small apartments in the capital.
Why there is little or no disruption in the prime housing market.

The London Premium

London continues to carry the highest € per square metre across the continent despite a recorded slowdown in price growth across the region, according to pan-European data from BNP Paribas Real Estate, writes Property Industry Eye, with the capital taking first position over key European cities, including Paris, Amsterdam and Oslo.

Alexander Millett, head of BNP Paribas Real Estate’s International & Private Client department said: “Compared to some of our European neighbours, London’s more modest price growth in recent months coupled with its retained high value means that the investment window looks incredibly ripe for super-prime assets.”

This is welcome news for our PCL resident and investor clients, who know that London can be relied on to provide a steady supply of premium assets that will hold their value.

Despite price resilience global pressures are impacting the property market

Highs and lows

Last year, sales of luxury homes in the UK capital were at their highest level for a long time — 605 properties sold for £5mn or more in 2022, according to estate agency Savills, more than any other year since at least 2006, writes the Financial Times

But by the beginning of this year, fears over the health of the global banking sector, the housing market and rising inflation had slowed the surge to a trickle. The number of properties sold in prime central London in the first quarter of 2023 was 29 per cent lower than the same period last year, according to LonRes, which tracks the city’s high-end market. At the same time, buyer demand has fallen in nearly every part of prime London since last summer, says the data company PropCast.

London has seen a growth in the demand for more bijou properties from discerning buyers

Small apartments for the super-rich

The super rich in the capital are forking out an extra 1.4 per cent to rent in prime London areas, signalling a continued demand for luxury spaces in the capital, according to City AM. They quote data by estate agent, Savills over the past three months showing London’s wealthiest tenants are also on the hunt for smaller spaces to rent with growth for one-two bed properties up 1.6 per cent. This is no bad thing given Westminster’s introduction of a 200 sqm GIA limit to all new dwellings in the city.

£10m plus property market has continued a year of positive growth

Decline but no disruption

The prime central London Buyer Demand Index from Benham and Reeves confirms a decline in demand across the prime London market of £2m-£10m, both on a quarterly and annual basis. However, according to this article by Property Industry Eye, the quarterly decline in the super-prime market of £10m-plus has not been enough to disrupt a year of positive annual growth.

Latest headlines from London's prime resi market

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