After a couple of difficult years, London's luxury property market is starting to get bullish again. The capital has managed to escape from the ravages of the economic downturn, and there appears to be a price-resistant core which seems to be booming, even as prices outside the most coveted areas stagnate.
Leading location specialist Knight Frank believes properties costing more than GBP10 million (HK$126 million) could see price growth in double digits over the next 12 months. This is in marked contrast to the overall British market where, at best, prices are expected to stagnate or, in some oversupplied or distressed regions, fall by up to 5 per cent.
Andrew Phillips, central London director at Hamptons International, says wealthy buyers are more visible.
'London property is seen as a safe haven for their capital and these buyers have no reservations about spending a lot of money on the right property.'
For buyers from Hong Kong, there are other attractive factors. Liam Bailey, head of residential research at Knight Frank, says: 'The real appeal of London for Hong Kong investors is that it is an open and transparent market. But there is also currency play, with the pound still needing to rise 18 per cent to get back to its 2008 level against the Hong Kong dollar.'
Bailey identified a cluster of contact and lifestyle opportunities that would-be buyers simply can't replicate elsewhere.
Although there are concerns about whether London can retain its status as a global wealth centre, the capital has more than 800 hedge funds managing assets worth GBP300 billion. The recent cut in corporate tax will, according to the government, promote London and Britain as a place that is open for business.
Being close to financial and commercial contacts is given as the single most important reason why foreigners are snapping up property, but a close second are lifestyle factors, with buyers keen to explore London's vibrant cultural life of theatre, music and art.
Asia's rising inflation means buyers are looking to protect their finances with some tangible assets.
The most desirable properties are those close to Hyde Park, which has led to a severe shortage of stock, especially in Marylebone and Regent's Park. Agents say the shortage has led to growing interest from the super rich in properties further afield in St John's Wood and on the South Bank. Another hot spot is the 'golden quarter' of Kensington, Chelsea, Belgravia and Hampstead.
According to property website Mouseprice, more than half of the most expensive addresses in Britain are in London, while a single house sale of GBP11 million last year meant that Victoria Road in Kensington is now ranked as the most expensive address.
Getting a foothold in London is, according to Phillips, almost an imperative for foreign buyers. 'While there are certain areas of Greater London and the Home Counties commuter belt that will always command respect, the central London market is by far the most secure in terms of pricing.'
Russians still dominate the market, but demand from Chinese nationals is growing rapidly. The agency had a record 61 nationalities buying property in London last year, with the fastest-growing interest from Spain and Uzbekistan, and continued strong demand from India and the Middle East.