New York is perceived as its biggest competitor, the real estate firm found in its Super-Prime London Report 2012 report. The new report underlines the fact that the prime London real estate market's soaring recovery is more fragile than it looks. 

Since 1976 gold prices have risen 802 per cent and central London house prices have climbed 2,685 per cent - geopolitical and security concerns in other countries are the biggest drivers for those considering buying or renting in super-prime London.

"But over the past decade the price of a typical super-prime residential property in London had plunged in gold terms," the report said. "In 2002 it would have taken you 24,000 ounces of gold to buy a super-prime mansion in SW1. A decade on, you would get change from 9,800 ounces."

In terms of prime rents, weaker employment prospects in the City have pushed down prices across the board in London over recent months. The report found that in the £6,000-plus/week market, the falls have been limited to -1.3 per cent, compared to -1.7 per cent in the wider prime market. "Anecdotally, the super-prime rental sector is slightly more protected from short-term employment market weakness, due to the greater preponderance of entrepreneurs and senior management," it said.

Overall, Knight Frank forecasts zero per cent growth in the super prime market in 2013, but with a return to positive growth in 2014.

Nevertheless, London’s super-prime residential market has weathered the global financial storms of the past year, with 2011 turning out a record year for the £10 million-plus (US$16 million) market and the first half of 2012 pointing to a continued solid performance, new research from Knight Frank shows.

Overall, prices in the £10 million-plus market rose 9.4 per cent in the 12 months to August 2012, while the rate of growth has slowed from 3 per cent in the three months to May 2012 to 1.8 per cent in the subsequent three months to August, the real estate firm found.

The findings illustrate how London is still able to attract foreign wealth through lifestyle, security, stability and educational factors: "There is plenty of money around and much of it is targeted at the top of the London market," it said.

But the performance of the prime and super-prime London property market has attracted the attention of politicians in the UK, as uncertainty around legislative - especially tax - changes is a key concern for potential investors at the top end of the market, the firm noted.

"It appears that the new top rate of stamp duty for individuals at 7 per cent has not undermined the market significantly. Sales are down in the £2 million to £5 million bracket but above that level the market has been relatively resilient. The problem pressing on the market is the uncertainty as to whether politicians have done their worst yet."

The report found that over the past two years 67 per cent of buyers in the super-prime market have come from overseas. London, it said, has the most diverse range of nationalities buying in any key global city.