When property tycoon Vincent Tchenguiz announced that he had sold his Mayfair home for nearly £17 million, after receiving an unsolicited offer, perhaps we need to look at the luxury end of the market to see whether it is beginning to overheat? This comes just weeks after the sale of a grade one listed property opposite Regent’s Park which went for around £80 million.
While it would be foolish to suggest any market movement on the back of two significant luxury property sales, the fact is that overseas buyers are pushing prices in the London property market higher and higher. The buyer for Vincent Tchenguiz’s Mayfair property is thought to be a Saudi Arabian investor who was obviously willing to pay a premium for the property. Against the UK economic backdrop, how far can luxury property prices rise in London?
Is the luxury sector overheating?
Fear and greed are two major elements of the worldwide property market and indeed they are very prevalent in the UK luxury property market. In many instances some of the leading investors in this particular field have enormous amounts of capital behind them and appear happy enough to pay premiums to gain access to much sought-after addresses. However, as prices push higher and higher at the top end of the market the number of overseas investors looking to pay premiums for London properties cannot go on forever.
Quote from PropertyForum.com : “Activity in three English counties around London has seen instruction levels to estate agents increase by 10% in the last couple of months compared with the same period a year ago.”
It is also interesting to learn that many luxury property sales are not reported in the popular press and therefore sometimes we do not get an in-depth picture of the market until much further down the line. There is obvious legal paperwork to complete for every property purchase a in the UK although sometimes this can take a few weeks or months to filter through the system.
Is the London property market sustainable?
It will be interesting to see how the London property market performs over the next couple of years as the UK economy is unlikely to move into overdrive and more likely to grow very slowly during this period. There is a growing argument that the London property market, and indeed to a certain extent the London economy, is in many ways detached from the rest of the UK, something which we have seen with regards to property prices over the last 12 months.
In some ways the luxury end of the London property market is dominated by overseas investors and therefore could in principle be described as “an international market”. The reality is that to a great extent UK base rates have little or no impact upon top tier property prices in London and very often these are dictated by investors from Saudi Arabia, etc.
The rise and rise of the London property market continues and this is especially prevalent at the luxury end of the market. In some ways we need to look at the London market and the non-London market as two entirely separate entities but because they are both entrenched in the UK this is not always easy. Surely the London luxury property market cannot continue rising at its current rate and indeed when we see investors like Vincent Tchenguiz selling his luxury property, perhaps now is the time to look again?