London overtakes Hong Kong as world’s busiest super prime property market as French, Hongkongers fuel purchases

London recorded a 3 per cent increase to US$3.75 billion worth of deals in 2020, toppling Hong Kong as the busiest market for luxury homes
French and Hongkongers contributed 23 per cent of the purchases in London while mainland Chinese and Americans also chipped in

International Property

Cheryl Arcibal

Published: 4:31pm, 14 Apr 2021

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London unseated Hong Kong as the top market for super-prime property in terms of transaction value, as foreign buyers including French and Hongkongers helped lift the market despite pandemic and Brexit concerns.

The British capital recorded US$3.75 billion of sales from 201 transactions, according to property consultancy Knight Frank, which defines “super-prime” as homes worth US$10 million and above. London snatched the crown from Hong Kong, which had 169 deals totalling US$3.2 billion.

UK home prices saw a rebound in annual growth at the start of 2020 before the Covid-19 pandemic struck, halting a recovery from four years of slowdown, according to the National Statistics Office. Prices have also gained, reflecting pent-up demand, changes in housing preferences due to Covid-19, and changes in property taxes, among others, it added.

“London’s super-prime residential market shrugged off Brexit and even looked through the pandemic – confirming the UK capital as the world’s leading wealth destination,” said Liam Bailey, global head of research at Knight Frank.

Hongkongers, encouraged by the UK’s offer of a citizenship path for British National (Overseas) passport holders, may have had a hand in helping London to the top spot. It posted a 3 per cent increase in transaction value in 2020. Hong Kong, which outranked New York and Los Angeles in 2019, saw a 31 per cent slump in 2020.

The British government last week launched a £43 million (HK$460 million, US$59 million) package to support BN (O) holders and their families that settle in the country, funding local councils nationwide to help with housing, education and employment.

As many as 5.4 million of Hong Kong’s 7.5 million population can access the UK visa programme for a five-year stay before becoming eligible for citizenship. Hong Kong has asked 14 countries to stop recognising the passports.

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Elsewhere, sales rose in nine of the 12 markets tracked by Knight Frank, with buyers spending a total of US$18.9 billion on 1,066 sales. However the average super-prime selling price fell 4 per cent globally to US$17.7 million in 2020, it said.

Buyers from Hong Kong accounted for 8.5 per cent of purchases by foreigners in prime central London, the second largest-group along with mainland Chinese and Americans, according to Knight Frank. The French contributed 14.6 per cent.

While Hongkongers have traditionally been among the top buyers of UK property, the citizenship path for 3 million eligible BN (O) holders and their dependents helped propel demand in London and other UK cities.

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Besides, upscale properties in London are also being sold at “greater discounts,” giving another incentive for buyers to invest in the city.

“Across all prime central London, the average discount relative to asking price was 8 per cent in the year to March 2021,” said Flora Harley, associate, residential research at Knight Frank. The discount was about 12 per cent for property worth £10m (US$13.7 million) and above, she added.

The trend is likely to continue, according to London-based property agency Benham and Reeves.

Demand for high-end homes, or those at £2 million and above, rose by 1 per cent last quarter over the final three months of 2020, it said. There was also a 2 per cent increase at the £10m and higher price point.

“We’re slowly but surely seeing momentum grow across the prime London market,” said Marc von Grundherr, director at Benham and Reeves. “A further uplift in homebuyer demand during the first quarter is certainly a positive sign for the year ahead.”