Prime or Super Prime – that is the question
The prime property market, particularly in London, continues to boom. Recent reports from Beauchamp Estates estimate that during 2022, 50% of the deals in the capital for homes valued over £15m had been to American buyers, purchasing around £620m worth of luxury property; with Swiss, French, Indian and Middle East buyers, not far behind.
Of particular note is that rising interest rates have increased cash purchases by over 60% for transactions in excess of £15 million, a significant shift, claims the Estates Group, from 2021 and 2020 when the majority of deals were funded by advantageous interest-only “super-prime mortgages”.
As a high-end architectural practice, it is interesting to note the reference to super prime mortgages when no such recognised definition seems to apply to the properties themselves. Having specialised in the delivery of dozens of projects for high-net-worth individuals, we at Lees Associates like to think that the words “super prime” realistically apply to properties where the owners are prepared to purchase their chosen £20 million+ property outright and then spend the same again on making the changes they want.
(If you have an alternative definition, then please let us know! We will be highlighting changes and trends within the prime property market via a regular monthly newsletter and through our social media network, so all feedback is welcome.)
It is not all about buying the property but putting a personal stamp on the building to reflect the individual taste of the new owner – buying the prime property is just the first step and as we have seen from the reports published by Beauchamp Estates, who we are indebted to for providing much of the information in this piece, and research from property agents such as Savills, there has been a notable rise in activity levels at the top end of London’s prime housing market, as wealthy foreign investors take advantage of the weak UK pound.
The reports state that London’s ultra-prime housing market for multi-millionaire and billionaire buyers has risen by 30% during 2022 – over a two-year period there has been a total of 92 sales for luxury properties priced over £15m with 52 sales in 2022 compared to 40 in 2021 (17 in 2020) – with London’s super-rich buyer market set to remain buoyant during 2023.
There are some other interesting statistics. Over the last two years London’s super-rich homes deals have achieved £3,259 per sq ft on average with the highest in 2022 hitting £10,000 per sq ft in Belgravia.
The number of mansions and townhouses priced above £15m also rose for the third year running, with 36 sold in 2022, compared to 27 in 2021 and 11 in 2020. Such billionaires’ homes typically being 9,292 sq ft in size on average, with seven bedrooms, a private cinema, health spa, swimming pool and generous garden. The number of ultra-prime apartment and penthouse sales have also risen.
Over the last 12 months the SW1 postcode (Belgravia/Knightsbridge) has been London’s top address for ultra-prime sales, accounting for 17 (32%) of the 52 £15m plus deals (up from 15 in 2021), followed by the W1 postcode (Mayfair) with 15 deals (up from 11 in 2021). And our own experience confirms that Mayfair and Belgravia remain as popular as ever.
Other key addresses for £15m-plus sales during 2022 include St John’s Wood (NW8) with seven deals, with Hamilton Terrace and Avenue Road being the area’s most sought after addresses; Kensington with four deals; Chelsea with four deals; Hampstead with two deals; Notting Hill with two deals; and Regents Park with one deal.
Looking at how London’s super-prime residential market will perform in 2023, Beauchamp Estates forecast that for properties priced above £15m values will either remain flat, or rise slightly by 1% or 2%, a result of global economic slowdown and rising interest rates.
Beauchamp Estates further forecast that during 2023 the volume of deals for homes priced above £15m is likely to rise by 30% compared to 2022, driven by wealth creation in three locations – the USA, Europe and the Middle East.
These statistics certainly provide food for thought, but as mentioned earlier we intend to collate information from a range of property experts dealing in the high-net-worth markets and will be sharing this to the wider Lees Associates audience – so please let us have your feedback.