Demand for ultra-luxe apartments in prime London postcodes has driven momentum within the city’s £5 million-plus residential market in the third quarter of 2023, according to new analysis from Savills.
Traditional UHNW hotspots of Chelsea, Kensington and Belgravia remain the most desirable locations for investment, data reveals.
Apartments are growing in popularity, driven by the launch of world-class developments over the last quarter.
Long-term upwards trend
There were 145 sales of properties worth £5 million or more in Q3, representing an almost 6 per cent increase from Q2 (137 sales) and 34 per cent increase from Q1 (108). In value terms, this accounts for almost £4.3 billion in sales in 2023 thus far. Some £1.7 billion worth of sales took place in Q3, compared to £1.4 billion in Q2 and £1.1 billion in Q1.
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Although the 2023 figures to date represent a decline on the record numbers over the same period of 2022 – 390 compared to 459 – they still reflect a 7 per cent uptick on Q1-Q3 2021. It also marks a 67 per cent increase on the Q1-Q3 average from across the pre-pandemic years of 2017-19.
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Prime London’s ‘remarkable resilience’
Frances McDonald, director of residential research at Savills, says the figures reflect London’s staying power as a global prime property hub.
She continues: ‘Prime markets generally have remained comparatively robust this year, but the latest data for the very top end of the London market underscores the remarkable resilience of the city’s prime central locations.’
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Despite the positive trend, price sensitivity is likely to continue into 2024. However, Savills still expects prime central London to outperform all other UK residential markets, due in large part to its international standing and its appeal to UHNWs from around the world.
Research published this month by Henley & Partners found London remains the fourth most popular city worldwide for centi-millionaires (individuals with net worths of $100 million or more) and the most popular outside of the US.
The pull of prime apartments
Apartments made up 45 per cent of sales in Q1-Q3 2023, compared to 40 per cent in 2022 and 28 per cent in 2021. Year to date, this represents the highest percentage of £5 million-plus sales since the Savills records began in 2012.
‘We’re seeing a particular focus on turnkey flats and a slight shift away from larger houses with outside space which topped buyers’ wish lists during the pandemic,’ McDonald explains.
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Ultra-prime apartment developments are particularly appealing to international first-time buyers, according to Alex Christian, joint head of The Private Office at Savills.
He comments: ‘The apartment market, in particular, is driven by global wealth, with buyers often buying their first London home, whereas houses are favoured by UK buyers or those from around the world who’re fully settled in London, some buying for the second or third time as family needs evolve.’
A run on larger homes in prime locations
Planning policy changes in some prime London boroughs will limit the size of new homes being built. This means UHNWs are competing for a limited stock of properties of a certain size.
Christian continues: ‘An awareness that the pipeline of large new build properties will be all but sold out within five years, plus the fact there is barely any stock of turnkey houses coming to market, continues to underpin activity and values across prime central London.’
The £10 million-plus market
Sales within the rarefied £10 million-plus market have also picked up considerably.
There have been 120 properties worth in excess of £10 million sold in the first three quarters of 2023, with Chelsea, Belgravia and Mayfair seeing the highest number of sales.
The overall trend mirrors that of the £5 million-plus market, with figures lower than in 2022 but higher than in 2021 and 2017-19.
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