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Indian buyers may benefit effective discount of 10% -12% on Super-Prime properties

International Property Consultants, Knight Frank, in their latest report, London: Super Prime Market Insight for spring 2021, has found that the super-prime (£10 million-plus) market in London is recovering after 12 months, during which the global pandemic had curbed the activity. The rise in demand paired with a minimal supply of super-prime properties has resulted in May 2021 record annual price appreciation for the first time since mid-2016. As UK’s economy is showing signs of recovery from the pandemic, Indian buyers have lost out on effective discounts of 2.73%, compared with the currency devaluation for the period of Dec-2020 (1 GBP = 99.96 INR) and May-2021 (1 GBP = 102.69 INR).

CURRENCY DISCOUNT NARROWS

 

Currency Effective discount in May-2021 (Approx)
United States Dollar 15%-20%
Great Britain Pound 10%-15%
Swiss Franc 20%-25%
Singapore Dollar 15%-20%
Malaysian Ringgit 15%-20%
Indian Rupee 10%-12%
Hong Kong Dollar 15%-20%
Euro 20%-25%
Chinese Yuan 15%-20%
Australian Dollar 15%-20%

Source: Knight Frank Research

According to the report, Euro and Swiss Franc currency holders have witnessed the highest discount of about 25%-27% each, in December 2020. In contrast, INR was lowest with 15%-17% during the period. With uncertainty in markets and devaluation of the currency, the discount rates have been significantly reduced. While Euro and Swiss Franc currencies saw a drop of 20%-25% each, INR dipped to 10%-12% in May 2021.

The Super Prime Market Insight for spring 2021 tracks sales volume and value for London’s super-prime (£10 million-plus) market. London’s SW1, which has properties such as The Hinduja Group’s The OWO Residency, recorded the maximum sales in terms of value and volume from April 2020 to April 2021, recording transactions for 18 super-prime properties worth £ 392 million.

Race for space:

The report highlights a shift in the sentiments amongst buyers who prefer home/standalone properties over flats/apartments in the super-prime (£10 million-plus) market. Compared to 2017, when house sales comprised 56% of the super-prime market and apartments comprised 44%, January to April sales data show houses account for almost 3/4th of sales in the super-prime market.

Shishir Baijal, Chairman and Managing Director at Knight Frank India said, “London’s super-prime market is currently witnessing a boom, owing primarily to the increase in demand. Super Prime and prime properties in London have recorded appreciation in recent times. During the pandemic, many Indian HNIs have shown greater interest purchasing prime properties in gateway markets like London as these markets have historically either beaten market trends during economic slowdowns or have indeed recovered at a faster pace than others due to strong fundamentals and robust global connect.”

Liam Bailey, Knight Frank’s global head of research comments, The London super-prime market is seeing a surge of interest. Purchasers with a combined budget of £36.8bn are actively searching for £10m+ properties right now, representing a rise of 54% compared to the five-year average. A combination of lockdown easing, a rapidly growing economy, sharply improved business sentiment, and a sense that city living is being reignited after a long close-down is helping to drive buyers. While the figure represents a growth in new demand from new UK and international buyers, there is also a growth in demand from existing luxury homeowners looking to buy a new, bigger, better, super-prime home to improve and expand their London base, as a response to Covid’s impact on their lifestyle.”

Key highlights:

  • In the six months to the end of April, £817.4million was spent on London super-prime property, 21% higher than the figure of £677.9 million recorded during the preceding six months
  • The number of new prospective super-prime buyers was 150% higher in May 2021 than it was in January 2020. Meanwhile, over the same period, the number of new property listings in the price bracket fell by 25% as owners hesitated against the backdrop of the pandemic
  • Based on the 12-month rolling average, in May 2021 there were 8.7% of new buyers for every new super-prime property listed for sale. This was the highest figure in 7 years.
  • Average super-prime prices increased 0.6% in the year to May, which was the first rise in more than three years