London's wealthy are paying top dollar for city's mega mansions

[LONDON] Buyers of mansions and penthouse apartments in London are finding bargains hard to come by.

The sales prices of homes that changed hands for more than £10 million (S$17.5 million) in the second quarter averaged 95 per cent of asking prices, according to a report from broker Knight Frank. That's the smallest discount since the end of 2016.

"The market has hardened because of pent-up demand and because of the shortage of supply," said Paddy Dring, global head of prime sales at Knight Frank. "Covid has meant that people are not selling unless they have to."

UK house sales collapsed after the government effectively froze the market for about six weeks through mid-May as part of its efforts to slow the Covid-19 outbreak. The luxury market has been slow to recover, even as prices for less expensive homes have surged.

Still, London has seen some blockbuster deals. Developer Christian Candy sold a mansion overlooking Regent's Park for about £104 million, Bloomberg reported in June. Polish billionaire Dominika Kulczyk bought a house near Harrods department store for £57.5 million earlier in the year.

A total of £1.1 billion was spent on high-end homes in the first eight months of 2020, an increase of 16 per cent from the year-earlier period, according to the report. The number of deals was roughly in line with last year, driven by a surge in the first quarter.

For now, prices for London's priciest homes don't look likely to fall much further after declines in recent years, Rory Penn, head of private office at Knight Frank, said in the report. "It doesn't appear that another 10 per cent is about to come off overnight," he said.

Restrictions on international travel meant that UK buyers accounted for 40 per cent of deals for top-end London homes in the first eight months, the highest share in a decade, according to the report. Easing of these restrictions will be a key factor affecting deals in the fourth quarter.

BLOOMBERG