News / Europe

    Super Wealthy Foreigners Boost London Economy

    Multimedia

    Henry Ridgwell

    London has long been one of the first stops for the world's super-wealthy.  The recent global economic downturn, however, saw the foreign investors go quiet.  Now after two years of holding back, they've returned with a vengeance, buying up luxury properties in the British capital.  Russian oligarchs are competing against Middle Eastern royalty and Nigerian oil executives for a slice of the London market.

    In the garden of a $14 million mansion, the gentle sounds of the fountains make this spot seem a long way from the city.  In fact it's just a few miles to central London.  Real estate agent to the super-rich, Trevor Abrahamson, says properties like this have helped lift the London market.

    "Essentially, London leads the world," said Abrahamson.  "In fact, if you look at New York, Los Angeles, Paris, Berlin, Frankfurt, the south of France - at the higher end those markets are taking much longer to recover."

    Prime Properties

    The property that's attracting most attention has the prestigious address of One Hyde Park.  It's a strikingly modern development set among the grand Victorian buildings of west London.  A penthouse here recently sold for a British record of $220 million.  The buyer's identity is kept secret but the agents report huge interest from the Middle East and Nigeria on the back of high oil prices.

    The property is equipped with bullet proof glass, an air purifier to prevent poison gas attacks, and a panic room - features designed to appeal to security-conscious foreign buyers.

    There's also an underground tunnel to the neighboring Mandarin Oriental hotel where the staff are on hand 24 hours a day, and the local shops include luxury department stores Harrods and Harvey Nichols.

    Trevor Abrahamson says that alongside the traditional buyers from the Middle East and Russia, new investors are opening their wallets.  "We've had almost every nationality.  The newest has been China.  We've had some serious enquiries, literally 50 or 80 million pounds sterling for a single property."

    Competitive Shopping

    A recent survey of luxury goods in London showed an increase in prices for the first time since 2007.  The cost of fine wine and caviar has soared by 25 percent in a year.  Ronnie Armist is director of investment advisors Stonehage, which conducted the survey.  He says the weakness of the pound plays a big part.

    "That has definitely attracted foreigners to the UK, and to London in particular, which is one of the great capitals of the world as we know," said Armist.  "They would add, to some degree, to the demand for these luxury items.  We're talking in particular things like sporting events, Wimbledon, or grouse shooting, or the Royal Opera House and other cultural events."

    In the competitive world of wealth, there's one potential trophy that's made all the headlines.  Regent Street is one of London's most famous shopping districts and owners Crown Estates have put it up for sale.  Total price is estimated at $2.5 billion.  It's reported that various sovereign wealth funds - including the Qatari royal family - have been eyeing the deal.

    For most people in Britain, the long struggle out of recession goes on, with high unemployment and slow growth.  They can only look on with envy as the super-rich return to London ready to spend some serious money.

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