London’s Ultra-luxury Property Market Continues to Record its Best Annual Performance

London, UK

Savills, a leading global property advisory company, has released a report on London’s ultra-luxury real estate market. The report noted that London’s property market is experiencing unprecedented growth and recovery after the Covid-19 crisis, with the ultra-luxury property market recording unprecedented levels of transactions worth more than £5 million. Between the first and third quarter of this year, 461 ultra-luxury property transactions (more than £5 million) were completed, recording the largest total number of deals compared to the total number of annual deals between 2015 and 2020. The third quarter alone recorded the completion of 160 ultra-luxury property transactions, maintaining the performance recorded in the second quarter of the year and exceeding the number of transactions completed in the same period last year by 33%.


London maintains its position as one of the world’s most important cities for capital investment in real estate. Savills explained that international investors are also benefiting from the fall in the price of sterling, as its weakness made luxury property prices in central London look much lower compared to 2014, especially for buyers in US dollars.


Luxury residential property values in central London have continued to recover after hitting lows in late 2019, and Savills expects an increase in international investment due to a weaker sterling, which should further support prices. For US dollars buyers, luxury property prices in central London are still 47% lower than the record they reached in 2014, offering significant opportunities. The number of new applications for luxury properties in central London as a result of the recovery in this market increased by 109% between January and September this year compared to the same period between 2018 and 2019. The strong performance of the rental market in luxury property in central London also points to high demand, with annual rental traffic up 13.7% compared to last year.


Stephen Morgan, CEO of Savills Middle East, said: “Our recent research shows that London has always been the preferred global destination for cross-border real estate investments, worth 23.6 billion US dollars annually. Savills, for example, from October to December of 2021 recorded the highest number of property sales in three months since 2016. London also leads the European countries in terms of annual rental growth for luxury property rental value and revenues in the first half of this year. The expectations for the ultra-luxury property market are generally positive as buyers seek to take advantage of the exceptional global market conditions coupled with the stagnation in growth that the central London property market has experienced for several years. Many investors prefer to place their investments in assets that offer them the opportunity to enjoy them, as the Covid-19 crisis contributed to prompting many to re-evaluate their desires, and to search for larger spaces characterized by green areas and home offices.”


Economists believe that a sharp rise in loan rates would negatively affect house price growth. Although the luxury real estate market relies less on real estate finance than other markets, it is vulnerable to higher debt costs. Prices and transactions in local markets remain subject to downward pressure, but its intensity varies according to when prices peak and fall again.


Commenting on the opportunities in the UK market, Stan Ennor-Glenn, Head of International Residential Sales at Savills Middle East Properties, said: “London is firmly positioned as a long-term stable destination with strong growth, making it an ideal choice for investment and wealth conservation. We expect the market to recover further after the Covid-19 crisis as many investors buy property, as more investors in the region buying properties with cash seek to take advantage of the fall in the rate of the sterling.”


Key reasons why London is an attractive investment destination  include:


  • Major companies expand their business in the capital of the United Kingdom.
  • Environmental, Social, and corporate Governance (ESG) – London is a world leader in ESG, which is a priority for investors and property occupiers. The Mayor of London has set a specific goal of bringing the city to carbon neutrality by 2030, with 65% of its municipal waste recycled. The influx of investment from companies to London coincides with an influx of property developers offering more attractive investment opportunities.
  • London has six international airports that handle more than 175 million passengers a year, welcoming 21.7 million visitors from around the world in 2019 alone.
  • World-renowned universities – More than 140,000 students study at higher education institutions in London, with the largest number of universities in the top 50 globally compared to other major cities such as New York, Sydney, and Beijing. London attracts students to stay there more than any other city in the UK, with more than half of students continuing to stay there after completing their studies.
  • Infrastructure – Crossrail project is set to serve 200 million passengers annually starting in 2022. The high-speed train network 2, the new British Rail project, connects the City of London with Birmingham, Manchester, and Leeds, making it easier to travel between these cities.
  • A business-friendly environment – More than 1.1 million private companies are based in London, representing more than 20% of all companies operating in the UK, which is one of the top-ranked countries in the World Bank’s Ease of Doing Business report.

Social Share