The world's multimillionaires are flocking to Britain, helping to fuel the biggest boom in luxury property prices for three decades.
Since early this year prices have risen rapidly in central London, especially in the boroughs of Camden, Islington, Westminster, Kensington and Chelsea, and the City of London.
In August, estate agency Knight Frank, reported that prices were 36 per cent higher than 12 months earlier, a situation, the company's head of residential research, Liam Bailey, declared 'phenomenal'.
This is the fastest rate of price growth since 1979 which was a time of rampant inflation, so this property boom is bigger in real terms.
The price rises have rippled out to the west London boroughs of Hammersmith and Fulham, and Richmond-Upon-Thames, and to the upper end of the country house market in the surrounding Home Counties. In East Sussex, the most active country market, values leapt 27 per cent over the past year, Knight Frank's figures reveal.
In London prices have risen fastest for large family homes such as 2Hyde Park Street in central London, and 34Arkwright Road in Hampstead, because these types of property are in the shortest supply. In the Home Counties, large country houses such as the GBP15million (HK$237 million) Marshcourt in Hampshire and the GBP3.5million Brooklands Farm in Surrey, command the highest price rises. In comparison, average prices across Britain increased about 10 per cent over the same period.
While five interest rate rises since the summer last year have stifled activity in the heavily mortgaged mainstream housing market, a spending spree by cash-rich, City of London financiers and overseas investors has resulted in frenzied buying activity in the luxury residential sector.
According to estate agency Savills, overseas buyers are purchasing half of London properties priced above GBP1million. In the Home Counties, Knight Frank's research shows that foreigners are buying 43 per cent of country homes valued over GBP5million, and will buy more than half by next summer.
Figures from Savills show strong European interest is being led by a growing body of Russian oligarchs, while well-heeled Arabs, Brazilians, Indians, Americans and Australians are regularly seen coming in and out of London estate agents offices. About 9 per cent of buyers come from Hong Kong and elsewhere in Asia.
Foreigners make an impact not only as buyers, but as hoarders. Once they get hold of the title deeds they cling on to them. This is helping to push prices higher.
'By buying and then holding properties for much longer periods of time we see properties disappear from the market,' says Mr Bailey. 'The traditional pattern of ownership was much closer to the following scenario: the foreign buyer would arrive in Britain to take up a work contract and purchase for occupation for the period of their employment. Following the termination of their contract they would move back to the United States, Europe, or wherever they came from.
'Now the pattern has changed with the foreign buyer much more likely to hold onto their property for a longer period as an investment even following their return to their home country.'
One of the big attractions for overseas buyers who settle in Britain is the non-domicile tax status awarded to foreign residents, which means they don't pay tax on income from abroad provided they don't bring it into the country.
'In recent years since the tax laws became extremely favourable to non-domicile foreign buyers, the prime central London property market has benefited enormously,' says Giles Cook, director of estate agency Chesterton Global. 'There have been several examples of properties at the very top end of the market changing hands for exorbitant sums of money, underlining the status of London as a secure, popular destination for overseas investors.
'It has inevitably created a new level of competition from many of the world's most successful entrepreneurs who are capitalising on the financial benefits, along with the wealthy domestic market.' Added to this are job opportunities in London's highly paid, burgeoning financial services industry, Britain's reputation for being a safe haven from turbulence elsewhere in the world and its transparent tax and legal systems, he says.
Recognising the growing importance of overseas buyers, developers are creating homes especially for the international market. Award-winning luxury developer Candy and Candy has designed interiors for two apartments at The Knightsbridge apartment block in Knightsbridge to appeal to foreigners looking for stylish bolt-holes in London.
These apartments, like other multimillion-pound homes marketed overseas, are fully furnished and filled with the latest hi-tech gadgetry and luxurious fittings.
Designer and developer Tusk Developments is converting the Holland Park Hotel in west London into the Halcyon, a collection of 12 multimillion-pound apartments. The GBP4.75million show apartment features a mix of oriental antiquities and contemporary western furnishings and art.
Developer Marcus Cooper bought London's second-biggest private house, the 25-bedroom Highgate mansion, Wintanhurst, for GBP32million this summer, to convert it into a GBP150million home for the international market. Only one house in the British capital is bigger: Buckingham Palace.
Developers are hiring the world's leading interior designers and architects to create super-luxury homes. Hong Kong interior designer Khuan Chew has designed the common parts of the Pan Peninsula apartment scheme near Canary Wharf.
Analysts and estate agents are cautiously optimistic about the prospects for the luxury residential market in London and the Home Counties. Mr Cook forecast a 7 per cent rise in prices over the next 12 months.
'Although several of the world's stock markets have experienced volatile conditions recently, I don't envisage this having a long-term impact on the overall market place,' Mr Cook says.
'Many non-domicile wealthy foreigners take a longer term view on such events and will continue to perceive prime central London as a safe and secure investment, resulting in the market continuing to perform well during the coming months.'