A report by Savills found prices for luxury properties in prime central London locations have sharply outperformed other parts of the British capital over the past six years.
Based on resale values, prices in Mayfair rose the most, with prices surging 117 per cent to an average of GBP1,960 (HK$24,100) per square foot. Other high-growth areas were Marylebone, Belgravia, Knightsbridge, Chelsea, Notting Hill and Regent's Park.
Savills says central London's residential property is increasingly behaving as an asset class closely linked to wealthy international investors.
'It will be the quality of location and property, and the ability to meet the strongest demand, that determines price relative to the market,' says Lucian Cook, director of research. 'Our analysis suggests that, otherwise, the extent of divergence in performance is too big to ignore.'
As for individual types of high-end properties, large houses, in excess of 10,000 sqft, beat all other categories, growing by 150 per cent in six years, a reflection of the value of rarity to high-net-worth international investors. Such properties now command between GBP2,500 and GBP3,500 per square foot, compared with about GBP2,000 for the best-performing flats in similar locations.
As examples, Lowndes House, on a quiet street at the heart of Belgravia, has been on the market for about GBP40 million, while Forset Court, a refurbished art deco-style block of apartments in Marylebone, found no shortage of buyers at prices starting from GBP320,000 for smaller units.
In terms of price per square foot, Knightsbridge is the most expensive at GBP2,007, followed by Belgravia at GBP1,982 and Mayfair at GBP1,960.
Knightsbridge has successfully expanded from being a commercial and retail location to becoming a magnet for high-net-worth international property buyers. The most well-known property in Knightsbridge is probably One Hyde Park near famous department store Harrods. Prices start at about GBP20 million and go up to more than GBP100 million.
Overall, values of prime central London resale properties rose by 87 per cent on average over the past six years, compared with 25 per cent for mainstream London.
'Buyer demand, particularly from international investors and the rise of high-value trophy homes, does suggest that lower-performing prime areas have not yet fulfilled their value potential,' Cook says.