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The Russian bear returns to the prime London property market

Prices for the most expensive properties in central London fell by 1.5% in February, the slowest rate of decline since April 2008, according to the latest figures from global property consultants Knight Frank.

The peak to trough price fall for prime London from March 2008 to date is now -22.6% but activity levels are beginning to rise, albeit from a low base, with viewings up 28% in February on a year on year basis

One of the key changes regarded as a sign of optimism is the return of Russian property investors after an absence of six months. Viewing levels from these buyers is almost 100% higher in January and February when compared to the final two months of 2008.

'After a period of sustained price falls in the central London market, it is rather early to suggest that we are seeing the beginning of a recovery. However, even a slowing in the rate of price falls can be viewed positively,' said Liam Bailey, head of residential research, Knight Frank.

'There is some further evidence that the situation in the London market, whilst not completely turning a corner, is at least seeing higher activity. With prices down by nearly 23% since last year's peak, purchasers are coming back into the market,' he added.

His analysis indicates that those buyers who are in the marketplace are serious about doing a deal at the new lower prices being offered. 'For those buying with Euro or US$ denominated wealth the picture is even more compelling and since January the most noticeable beneficiary has been the wealthy Russian buyer, many of whom hold savings and investments in a mix of Euro and US$,' he explained.

The tentative return of the super rich buyer has led to the log jam in the super prime £10 million plus market being broken. The latest analysis shows that between September and January the number of £10 million plus deals in central London virtually ground to a halt. But in February alone there was one sale at this level each week, a significant turnaround, according to Bailey.

Elena Norton, head of Knight Frank's Russia and CIS desk, said the wealthy Russian buyers were looking after business interests back home and those who were active in the property market were looking into investment purchases in France and the Alps.

'Since mid January they have been back in London with a vengeance. The classic locations of Belgravia and Knightsbridge are still very popular, however Kensington has been an especially prominent area for recent viewings, she explained.

The Russians are looking for an established prime location with a period ambience, but they also want their property to be modern, with porterage, underground parking and facilities like swimming pools.

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