According to international real estate consultant Knight Frank, despite the unknown outcome of Brexit, underlying demand for London's super-prime property remains resilient.
Brexit-related uncertainty has curbed trading activity across all UK residential markets over the last 12 months. While London's superprime (£10 million-plus, or $12.7m USD and higher) price bracket is no exception, it would be too simplistic to view this particular market entirely through the prism of UK politics.
First, the demand drivers are more numerous and complex. More wealth is being created in the world than ever before and it continues to move across borders.
Combined with the fact that there are more ultra-high net worth individuals based in London than in any other global city, and that they have a growing propensity to invest in real assets, it is perhaps not surprising that last year saw the highest number of £20 million-plus ($25m USD plus) deals in London (38) since 2014.
Indeed, the total volume and value of transactions above £20 million ($25m plus) has been on a broad upwards trajectory over the last nine months.
Overall, there were 109 transactions above £10 million ($12.7m) in the year to January 2019, a 19% decline compared to 134 over the previous 12-month period. Meanwhile, the total value of transactions decreased by a smaller figure of 11% over the same period, reflecting the uplift in activity in the higher price brackets.
Notting Hill and Mayfair are the two markets where transaction volumes grew over the same period. While demand in Notting Hill has grown due to the extent of price adjustments in the area and its needs-driven buyer base, Mayfair has benefited from a high-quality new-build pipeline.
More broadly, the weakness of the pound has sustained demand. The effective discounts available for a range of overseas currencies since the EU referendum are similar to those seen in the 12 months following the collapse of Lehman Brothers.
The second factor that needs to be understood when evaluating the performance of the super-prime market is that pricing has had less far to fall due to its characteristics as a more thinly traded and discretionary market. This fact, which means previous price increases have been less steep, explains why an annual decline of 2.5% in April 2019 was half the PCL average.
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According to international real estate consultant Knight Frank's latest Prime Global Cities Index, which tracks the movement in luxury residential prices across 45 cities globally, registered its lowest rate of annual growth since the final quarter of 2009, when the world was in the grip of the financial crisis.
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