Our Findings
Drop in Value of Deals
Between January to June 2024, £731 million worth of deals were agreed for the sale of ultra-prime homes in Prime Central London priced above £15 million. This represents almost £100 million less (a 12% drop) compared to the £829 million worth of deals agreed during the same period in 2023.
Slight Increase in Number of Sales
Interestingly, the actual number of sales deals for London homes valued above £15 million over the first six months of 2024 has risen slightly to 46 deals (8 deals per month), compared to 45 over the same period in 2023.
Shift to Smaller Homes
The decline in the combined value (in £ sterling) of the deals is attributed to multi-millionaires and billionaires spending less overall time in London and purchasing smaller homes during the first half of this year. In the first half of 2024, super-wealthy buyers spent an average of £16.56 million buying a London home, down from £18.5 million in the first half of 2023, and significantly lower than the average spend of £21 million during the equivalent period in 2022.
Crucially, in the first half of 2023, billionaires who bought houses and mansions valued above £15 million focused on acquiring large homes that averaged 11,200 sq ft in size. In the first half of 2024, the size of a house being purchased has almost halved to just 6,500 sq ft. In 2022, the average size of a £15 million plus purchased house was 7,000 sq ft.
Likewise, in the first half of 2023, the average size of apartments valued over £15 million purchased averaged 7,380 sq ft in size. During the same period in 2024, the size has dropped to 4,000 sq ft, which is also below the 2022 figure at 4,844 sq ft.
Decline in Speculative Investments
Another change has been the dramatic drop in speculative investments in Prime Central London, where wealthy buyers purchase homes valued above £15 million to refurbish and resell or for rental investment. In the first half of 2023, buyers spent almost £210 million on ultra-prime buy-to-turn and buy-to-let properties. During the same period in 2024, this figure has dropped to £64 million. Many speculative investors in the super-prime market are currently focusing on Dubai, where the luxury housing market is exceptionally buoyant, and buy-to-flip deals provide some element of risk but also potentially lucrative opportunities.
Popular Locations
In the first half of 2024, the top five most popular locations for buying £15 million plus homes have been, in rank order, Knightsbridge, Mayfair, Chelsea, St John’s Wood, and St James’s. This is a shift from 2023 rankings when the most popular addresses were Mayfair, St James’s, Kensington, Chelsea, and St John’s Wood.
The popularity of Knightsbridge and Mayfair, the most valuable living space per sq ft in London, has meant that during the first half of 2024, billionaire buyers have spent on average £4,400 per sq ft on apartment and penthouse purchases and £2,600 per sq ft on buying luxury houses, up from the equivalent figures of £4,300 per sq ft and £2,500 per sq ft in 2023.
Leading Buyer Nationalities
The £15 million plus residential market in London is currently being driven by buyers from just five countries: the United States, India, Saudi Arabia, the United Arab Emirates, and Britain. To complete the top-10, other significant buyers are from Qatar, Canada, Nigeria, Pakistan, and China.
Analysis
Resilience of London Market
The fact that the number of sales deals has risen marginally during 2024, despite the forecast rise in Stamp Duty for overseas buyers and potential tax rises for the wealthy, shows that London remains a “must be, must buy” location for a typical billionaire’s international residential property portfolio.
Global Competition
The drop in the overall spend and size of homes being acquired shows that billionaires have increasing choice internationally on where they can buy ultra-prime high-quality residences. Despite the enduring popularity of London’s private schools, universities, fine dining, cultural facilities, and political stability, the UK capital faces rising competition from locations including Dubai, the French Riviera, and Miami.
Residential property prices in Dubai have risen by 20% since 2020, and in 2023, the number of deals rose by almost 30%, and there were twice as many deals for homes valued over £15 million compared to London. Similarly, data from our French offices shows that for homes valued above €15 million (£12.85 million) along the French Riviera, prices have risen on average by 20% between 2019 and 2023, exceeding the performance of equivalent homes in London where values rose by 13%. In Miami, prime residential values have risen by over 7% over the last 12 months, driven by real estate investment from Latin America.
Trends and Future Outlook
Shift from Houses to Apartments
During the first half of 2024, multi-millionaires and billionaires have downsized their residential real estate investments in London. In 2023, ultra-wealthy buyers purchasing homes in London valued above £15 million were acquiring large ‘main residence’ houses and mansions in the £25 million to £40 million plus price range, and there were several purchases for mansions priced over £100 million in Regent’s Park and Mayfair. This year, the highest demand and majority of sales have been in the £15 million to £25 million price range, driven by American and Middle East buyers who have been purchasing spacious pied-a-terre apartments ideal for occasional stays. For example, during the first half of 2024, our team sold a penthouse on Brook Street in Mayfair for £21.5 million to a businessman from Abu Dhabi to use as his London pied-a-terre, a duplex on Charles Street in Mayfair for just under £15 million to an American buyer, and just over a week ago, we sold a £15 million penthouse in Oceanic House in Westminster to an EU citizen for use as his London pied-a-terre.
Impact of the General Election
As a result of this shift from houses to apartments, there has been a slowdown in sales in the first half of 2024 for houses and mansions priced from £25 million up to £40 million. For example, there are currently over 20 houses in Belgravia priced over £15 million available for sale. Some of this is due to the UK General Election and uncertainty over a Labour Government and taxation. Yet, there are still offers on big houses and mansions, but the offers are substantially below the asking prices and are not being accepted by vendors. Clearly, potential buyers are trying to factor in Stamp Duty and taxation changes into their offers in order to derisk their purchases. However, the other big reason is global choice and competition from other wealth centres such as Dubai, Miami, and the French Riviera. Our Ultra-Prime Barometer data calculates that the typical billionaire spends around £100 million of their overall wealth on property, and currently, what they are doing is buying pied-a-terres in London, but alongside this, they are purchasing big villas and penthouses in Dubai, taking advantage of the Emirate’s current property boom, and post-Covid, there has also been a significant return of international buyers to the French Riviera and Miami.
Future Prospects
During 2023, some of the biggest deals were agreed upon during the last quarter of the year. Super-wealthy buyers had reviewed properties earlier in the year, but final offers were only agreed towards the end of the year. This year, there is clearly pent-up demand due to the pause generated by the UK General Election. Now that there is a new government with a strong majority, providing political stability for the next five years, it is likely that we could see a repeat of 2023 and a strong flurry of sales and big deals towards the end of 2024.
The steady flow of £15 million plus deals during the first half of 2024 shows that London remains an essential location for multi-millionaires and billionaires to buy and have a home as part of their global property portfolio. During the first six months of 2024, there have effectively been two billionaire buyer property deals per week in Central London, which is extremely positive. However, the overall spend and the size of homes being purchased in 2024 are down on 2023, and this shows that whilst there remains a sustained appetite amongst the world’s super-rich for buying homes in the UK capital, the new Labour government needs to be mindful that too much taxation and regulation could make buyers choose to invest elsewhere. The new government needs to focus on keeping London as a highly attractive place to live, invest, and do business.
Interest rates need to come down, and the UK capital must continue to welcome wealthy people from around the world to live and invest here. London remains the most popular city in Western Europe for education, fine dining, culture, and luxury housing. However, the ultra-wealthy can afford to buy anywhere in the world, and London faces rising competition from locations including Dubai, the French Riviera, and Miami. To keep London as an attractive destination for global wealth, the Labour Government needs to avoid any attempt to introduce Capital Gains Tax on principal residences and additional taxation on second homes.