London growth spurt boosted by non-doms

Purchases made by foreign investors account for around 60 per cent of today's property transactions, pumping £4 million into the capital's housing market.

We have barely reached the mid-point of this growth though according to experts, who believe that demand from the foreign super-rich will continue to see marked growth over the next ten years.

Liam Bailey, head of residential research at Knight Frank feels that even though the capital will see good growth in the coming decade it will not be of the scale seen in the last two years.

"London remains a dominant centre for global wealth creation which is rising worldwide at a current rate of 9 per cent a year. It is therefore our view that as long as the world’s top investment banks, private equity firms and hedge firms regard London as their favoured market its super-prime market will continue to follow the upward trajectory."

Ian Marris, partner, London residential development at Knight Frank added: "This report confirms our view that despite the slowdown in the wider property market, London's super-prime market looks set to lead the UK for at least the next 12 to 18 months.

"On the basis that there is no adjustment to the current equilibrium we see London as the strongest residential market for 2008 and it will continue to be regarded as the home of choice to the international community."

Bailey however warned that the gap between this emerging super-prime market and the prime and main London markets could widen if its influence does not feed across.

He said: “The law of supply and demand will also have an increasing impact in 2008 and beyond as the lack of properties available in locations targeted by wealthy purchasers comes into play. This is set to continue as we estimate there are currently around 1,140 super-prime units in central London’s development pipeline against in excess of 12,400 units in the prime market

“Finally, the impact of the overhaul of the Capital’s transport infrastructure and its alignment with the redevelopment of some of Europe’s largest brownfield projects can’t be underestimated. The priority will be to keep up the momentum for regeneration while still paying close attention to quality as developers drive towards creating the 35,000 new households thought to be needed a year.”