Bloomberg News reports that Luxury-home prices in central London climbed the most in nine months in August, according to Knight Frank LLP, as the increasing risk of a global recession prompted investors to seek a haven for their wealth.
Values of houses and apartments costing an average of 3.7 million pounds ($6 million) rose 10.5 percent in the 12 months through August, according to a report released today by the London-based real-estate broker. That’s the most since November, when there was an 11.2 percent increase.
“There’s a lot of money out there looking for a home,” Liam Bailey, head of residential research, said by telephone. “You had the U.S. debt crisis, euro-zone debt crisis, financial market turmoil and none of those things have touched” London’s luxury-property market.
Increasing Purchasing Power of Overseas Investors
The pound’s weakness is making luxury real estate in London more affordable to overseas buyers, Bailey said. The U.K. currency has lost about 20 percent against a basket of 9 other developed-market currencies since the property market’s previous peak in March 2008, as measured by Bloomberg Correlation- Weighted Indexes.
The number of prospective buyers viewing prime central London properties increased 23 percent in the three months through July, while the number of homes for sale rose 13 percent, Knight Frank said. The company didn’t give comparable numbers for the two periods.
Prime central London real estate is reflecting the security that gold is offering investors, Bailey said. Gold for immediate delivery has climbed 27 percent this year and reached a record $1,913.50 an ounce on Aug. 23.
Rents for prime residences rose 0.2 percent from July, according to the broker. British tenants accounted for about 42 percent of the total, while Americans were the largest group of foreign tenants, with 14 percent.