Foreign buyers to spend $6 billion on luxury homes in London in 2011

London is continuing to attract wealthy overseas buyers in large numbers with $6 billion (£3.7 billion) likely to be spent on luxury property in the British capital in 2011.  A recent report from international property consultants Savills has found that a weak pound and London’s continued reputation as a financial centre is driving the sale of luxury property.

Weakness of pound attracting wealthy buyers looking for luxury overseas property

The World in London report from Savills says that foreign buyers will snap up $6 billion (£3.7 billion) of luxury overseas property in London in 2011. 

Part of the continuing appeal of London has been the weakness of sterling in relation to other currencies.  Since 2007 the pound has lost 18 per cent against many overseas currencies which has attracted many rich foreign buyers.  London is also seen as a secure place to own a property asset, with many buyers coming from less politically or financially stable countries.

The report found that many groups of foreign buyers of luxury homes come from Western Europe whilst the biggest single investors are from Eastern Europe and Russia. 

In April 2011, Ukranian billionaire Rinat Akhmetov broke the record for a UK home, paying $218 million (£133.7 million) for a penthouse at the One Hyde Park development in Knightsbridge.

Investors from China and Africa set to drive up prices

Savills also believes that the number of wealthy overseas buyers would increase were Chinese billionaires able to move their money out of the country more easily.  Currently, there are significant restrictions on the cash that Chinese entrepreneurs can take out of the country.  If these were relaxed, Savills believes that luxury London homes could rise in value by up to 15 per cent.

Yolanda Barnes, head of residential research at Savills said: “As new global economies emerge, other global cities will compete for their custom. China, Asia-Pacific, Latin America and even Africa all have huge potential as future sources of inward investment to London real estate.”