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Luxury central London property was best performer in UK real estate in 2009, report shows

And the impact of the recent ‘bonus tax’ on bankers is expected to have a limited effect, says the Prime Central London Index from international consultants Knight Frank. Although there were several £800,000 to £1 million sales that fell apart in the days immediately after the announcement there were also a record 22 sales agreed in its offices in Mayfair, Belgravia, Knightsbridge and Kensington in the same week.

Overall prices in this sector have now risen by 13.8% since March although they are still 13.4% below their March 2008 peak level. The locations seeing the strongest growth are Chelsea, Kensington and Knightsbridge with 3% growth over the last month.

‘The top end of the London residential market saw a remarkable revival during 2009. The number of buyers increased by 25% in the whole of 2009 compared to 2008 led by interest from Russia, Europe, especially Italy, and the Middle East,’ said Liam Bailey, head of residential research, Knight Frank.
The report shows that in recent months the more expensive £5 million to £10 million and £10 million plus price brackets have caught up with the price growth which initially began in the sub £2.5 million segment in the Spring. During December, the strongest market was the £5 million to £10 million sector with 2.6% growth.

‘The prime London market has been the strongest property sector in the UK this year, benefitting from substantial inward investment from overseas buyers looking to take advantage of the weak pound and lower overall prices. In more recent months the revival of the City economy has brought more traditional buyers from the banks, hedge funds and private equity houses back into the market,’ explained Bailey.

Indeed locations such as Kensington, Notting Hill and Chelsea, the traditional stomping ground of financiers, have seen growth of 3% in the last month as this market comes back to life.
‘In summary the year is ending on a high note. With demand from new buyers almost 25% higher than a year ago and supply around 18% lower over the same period. Investors and occupiers are competing hard to uncover the best properties and limited supply is leading to competitive bidding,’ said Bailey.
‘The short term outlook looks positive. The longer term market performance rather depends on the outcome of the election and next year’s emergency budget,’ he added.