Amid Eurozone concerns and new taxes in France, wealthy foreigners have been parking their money in London property for some time now. But with this coming off the back of the influxes of Middle Eastern and Russian investors in recent years it may not be long before the capital runs out of prime residential properties,
London Central Portfolio has warned.

The asset management firm says that the number of properties changing hands in Prime London Central was, as of the first quarter of 2012, down to just 5,409 over the year – a figure almost 60 per cent down on figures reported in Q1 2000. LCP warns that it is only going to take 15 years for PLC “stock” to dry up, based on the average drop in sales each year since 2000.

Obviously, this shortage of prime residential property is inevitably going to push up prices, particularly since the area demarked PLC is just six square miles centred around Hyde Park. The PLC area is also highly constrained as to space for new-builds and there are only 780 new housing completions projected over the next four years in the Royal Borough of Kensington & Chelsea and 614 in the City of Westminster, the firm says. As such, stock levels can “never significantly increase.”

According to LCP, the dearth in available properties is also a function of a reluctance among investors to relinquish “safe haven” assets.

“The reduction in sales in PLC shows investors’ retrenchment into blue-chip tangible assets like gold and a reluctance to divest of one of their best performing assets at a time when global equity markets show ongoing volatility,” said Hugh Best, head of investment management.

LCP notes that during the height of the financial crisis PLC transactions fell by 47 per cent from their 2006 high point, and as such the firm expects transactions to fall even further in light of the continuing Eurozone crisis.

The enduring appeal of the UK – and by extension London – as a home for the wealthy was further underlined yesterday with the publication of a new study by Wealth-X on the UK’s ultra high net worth population. The study revealed that the UK is home to 10,760 UHNW individuals, who are worth a combined $1.3 trillion. Of these UHNW individuals 31 per cent are considered to be non-domiciled, with non-resident Indians and Middle Eastern individuals representing a significant proportion of these. This trend was even more pronounced within the UK’s top 15 wealthiest, of whom two-thirds were non-doms.

In at the top spot with a net worth of $16.4 billion was Alisher Burkhanovich Usmanov, the Russian oligarch and Arsenal Football Club shareholder. He replaced Lakshmi Niwas Mittal, the Indian steel magnate, who slipped to number two, with a net worth of $15.8 billion, due to the waning stock price of his company ArcelorMittal. Third was Roman Abramovich, another Russian oligarch and owner of Chelsea Football Club, whose personal fortune now stands at an estimated $12.1 billion.