Who is buying London’s mansions? 60 per cent go to wealthy buyers from four countries

The banking and finance sector is driving occupation of prime office space in the West End

The super-prime market in London is booming.

More mansions in the capital are being sold, for higher prices, to an increasingly international base.

In 2023, sales of super-luxury new-build London apartments rose by 137 per cent to an average of £4,306 per square foot, according to Beauchamp Estates.

Supply of luxury houses has also been boosted by an influx of high-end development in prime London areas.

While many houses have been either left empty or put on the market as a result of sanctions on Russia, this has not had the effect on the market that analysts warned in 2022, Charles Lloyd, Head of Mayfair sales at Beauchamp Estates said.

While business tycoons and politicians connected to the Putin regime had their assets frozen, with Bloomberg News estimating the combined value of frozen property at around $2bn in 2022; these assets remain frozen, according to the UK government.

These buyers have now turned to luxury property in the Middle East, Lloyd said.

“The Russian home buyer marketplace is more complex than media headlines sometime suggest… there is actually significant misunderstanding of this marketplace,” he said.

Many Russian buyers have not fled, and a majority – particularly those with British passports – remain able to sell and purchase property.

“It remains totally legitimate [for these buyers] to buy and sell houses”, Lloyd said.

Sanctions have clearly not dampened the market: Mayfair super-prime home sales – for properties worth over £10 million – doubled in 2023, according to a survey by Beauchamp Estates.

So, who is buying the mansions then?

Around 60 per cent of luxury deals in 2023 were with buyers from just four countries: The United States, Saudi Arabia, the United Arab Emirates and China.

Together, they purchased around £780 million worth of luxury property.

Indian, Israeli and Nigerian buyers were the other big buyers of luxury homes.

Interest has been increasing from the Middle East over the last six months, according to Charles Lloyd, head of Mayfair sales at Beauchamp Estates said.

“London is always seen as a safe haven at times of turmoil elsewhere in the world,” Lloyd said, adding that many buyers are increasingly looking for permanent homes in London rather than buy-to-flips or rental investment.

Cash purchases of luxury homes – mortgage-less deals – are becoming more common, too. 70 per cent of sales last year were cash buys, up from 60 per cent in 2022 and 45 per cent in 2021. according to Beauchamp Estates.

This trend appears to be the cost-of-living crisis hitting the upper echelons of global society (perhaps not in quite the same way as elsewhere): high interest rates and a squeeze in bank lending have led to significant decline in so-called preferential ‘billionaire mortgages’, which in previous years billionaires have used to fund residential buy-to-flip opportunities.

In 2021, multiple UK high street banks offered a maximum mortgage loan of £10m, at a time when the average rate for newly drawn mortgages was 1.5 per cent.

Changes to interest rates have made the super-prime market “less dependent on debt than other levels of the market”, Lloyd said.

Stamp duty has deterred buying a little by pushing billionaires to rent – they can spend the 17 per cent stamp duty on a luxury pad for four to five years – but the market remains resilient.

“I think people used to say: It’s no big deal, I’ll buy the property [and] if I don’t like it I can sell it and get that money back. Whereas today if they’re paying 15 per cent stamp duty, the equation doesn’t work so well,” Gideon Stone, co-founder of prime property developers and designer Janine Stone & Co.

“It took a while for people to get used to the fact that stamp duty was here to stay and adapt,” he added.

A change in government might lead to a further change to prices: The Labour party have pledged to increase the surcharge for overseas buyers of residential properties.

This may not shake the market, though. In fact, a labour government might spell even better fortunes for the super-prime market. Historically, it is more resilient under labour, Lloyd said.

Stone added that he wasn’t concerned about a change in government affecting the super-prime property market.

“I think [buying houses] is emotive, really,” he said. “I don’t believe that prices… are going to be the determining factor as to whether someone decides to live in London versus New York.”

“If they have a desire to be in the UK, they’ll pay whatever they need to pay to get the property they want,” he said. “I’m not sure that one or  two per cent on the purchase price is going to deter them from actually proceeding with the purchase. But obviously, there will come a point where people think it’s too much.”

This point may not be too far away: While future demand is likely to remain high, supply will soon tighten: big developments are wrapping up and being sold, leaving room for prices to rise, Lloyd said.

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