According to Knight Frank, the UK capital’s position at the heart of global financial services means that it continues to attract the world’s wealthiest individuals, maintaining the huge demand pressures on properties in the £4 million-plus bracket.
This pressure on the limited number of properties means that growth in the ‘super prime’ housing sector will be sustained in the coming years, despite the government’s plans to change the tax rules for non-domiciles.
Liam Bailey, head of residential research at Knight Frank, said that while London remained a favoured market, the proposed tax changes for foreign investors could have a significant effect on the city’s attractiveness.
He commented: “London remains a dominant centre for global wealth creation so as long as the world’s top investment banks, private equity firms and hedge firms regard London as their favoured market, its ‘super prime’ market will continue to follow the upward trajectory.
“However, the regulatory and tax changes proposed in the government’s Pre-Budget Report could have a significant impact on London’s competitiveness as wealthy foreign investors review the value offered by their property portfolios.
"The current reality is that only a minority are considering a sale before the changes come into effect in April 2008.”
Melanie Bien, director at Savills Private Finance, said she could not foresee any problems in the ‘super prime’ market because of the pressure on supply from cash rich foreign nationals.
“There are a huge number of foreign nationals coming over and looking to buy and for many of them, money is no object. Especially over the £5 million mark, there is real pressure on supply so when something does become available, it is immediately snapped up. So I don’t see that end of the market drying up.”
