More UHNW individuals are choosing to rent super-prime homes in London as stamp duty, high interest rates, and the threat of a Labour government dampens the sales market, according to a report by luxury estate agents Beauchamp Estates.
Against a backdrop of economic uncertainty, the ultra-prime rental market in London has rebounded to pre-pandemic levels, with rents in the capital’s prime postcodes surging by 8.8 per cent year on year. Prime central London (PCL) rental values now stand at almost 30 per cent above pre-pandemic figures with demand fuelled largely by overseas buyers, according to Beauchamp’s Ultra-Prime Barometer Wealth Report.
[See also: Prime central London property rebound: market is tipped to grow by one-fifth by 2028]
Prime rental hotspots include perennial UHNW favourites Mayfair and Belgravia, as well as St John’s Wood, Regent’s Park and Hampstead.
Gary Hersham, founding director of Beauchamp Estates said ‘strong demand and a lack of supply [in ultra-prime properties to buy] have been the key features’ of super-prime lettings market in London this year.
Sales fall as rents soar
A total of £340 million worth of £15 million-plus homes were sold between the first six months of 2023, representing a 15 per cent drop on the same period last year (£400 million) and a significant fall from the £514 million in the first half of 2021. In contrast, there were 10-11 super-prime homes rented each month from January-June, with renters spending £5,000 to £30,000 a week.
[See also: House of the Year 2023: RIBA shortlist celebrates the best of British architecture]
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Erik Holmgren, lettings manager at Beauchamp Estates says: ‘The super-prime lettings market in London has boomed in 2023 with UHNW tenants moving beyond their traditional focus on Mayfair, Belgravia and Kensington to look at letting super-prime homes in locations including Marylebone, St John’s Wood and Hampstead.
‘Over the past six months Beauchamp Estates has secured super-prime lettings deals which have generated combined annual rental income of over £5.5 million, with tenants from America, China and the Middle East being particularly prominent in the PCL market over the last six months.
London’s wealth hub rivals
London is facing rising competition from rival wealth hubs such as Dubai, the French Riviera, Los Angeles and Miami.
The quality of London's restaurants, cultural offerings and sporting venues as well as quality education, a safe haven for capital and personal security were reasons why UHNWs chose to put down roots in the city. However concerns over a Labour government in 2024, as well as interest rates, taxation and state regulation has dented the city's global reputation.
Dubai, where the number of £15 million-plus home sales is double that of London, has a particular pull for UHNWs due to less state scrutiny into finances and sources of wealth, the report suggests.
The super prime property market in the French Riviera was increasingly buoyant, with a super-prime property now commanding an average value of £20.4 million (£3,873 per sq ft) while in central Manhattan, a super-prime home now averages the equivalent of £23 million (£3,757 per sq ft).
'Luxury property in wealth hubs such as London, Manhattan and the French Riviera remains a safe asset class and as a result these ultra-prime markets have shown remarkable resilience,' Hersham said.
A global portfolio
The survey also revealed there are 3,194 billionaires in the world, with the largest number in North America at 1,011 billionaires or 31.7 per cent of the world's billionaire population. Of those.
There are 933 billionaires (29.2 per cent), in western Europe, with 177 of living in Britain. There are 835 billionaires (26.1 per cent) across Asia.
[See also: What is the state of the London property market in 2023]
Billionaires typically invest 32 per cent of their personal wealth in residential property, with a portfolio that will combine at least three properties worldwide for personal use, alongside investment properties. The remainder of their wealth is focused on equities (stocks and shares), commercial property, government bonds and venture capital.
The report analyses how multi-millionaires and billionaires make their wealth, where they prefer to live in the world, and their lifestyle choices. Beauchamp Estates collaborated with Dataloft to analyse data from LONRES, in-house market intelligence from Beauchamp Estates multi-national offices and billionaire information from Wealth X.
