More multi-millionaires and billionaires are choosing to rent super-prime homes in London, rather than purchase, and the UK capital is facing rising competition from rival billionaire destinations in particular Dubai, the French Riviera, Los Angeles and Miami.
These are just some of the findings released to co-incide with the publication of Beauchamp Estates latest Ultra-Prime Barometer Wealth Report which analyses how multi-millionaires and billionaires make their wealth, where they prefer to live in the world, and their lifestyle choices.
To produce their latest wealth report Beauchamp Estates collaborated with Dataloft to analyse data from LONRES, in-house market intelligence from Beauchamp Estates multi-national offices and billionaire information from Wealth X.
Beauchamp Estates reveal that because of Stamp Duty and rising interest rates, the number of multi-millionaires and billionaires choosing to let rather than purchase super-luxury homes (worth in excess of £15 million) in London in 2023 has far exceeded those choosing to buy; with UHNWIs typically spending on rent anything from £5,000 to £30,000 per week, the favoured locations to let being Mayfair and Belgravia for apartments and St John’s Wood, Regent’s Park and Hampstead for houses.
Beauchamp Estates research shows that in the first half of 2023, multi-millionaires and billionaires purchased £340 million worth of homes valued above £15 million in London, equating to two billionaire homes sold each month. Over the same period between 10 to 11 super-prime homes per month have been rented for values over £5,000 per week, with multi-millionaires and billionaires spending almost £15 million to rent homes in London’s best addresses over the first six months of 2023.
As a result, the Ultra-Prime Barometer Wealth Report says the ultra-prime rental market in London is booming and rents in the capital’s prime postcodes have surged by 8.8% annually, with PCL rental values now standing at almost 30% above pre-pandemic (2017-2019) figures.
In the sales market, the Ultra-Prime Barometer Wealth Report found that the average billionaire’s home in London now costs £18.8 million in Mayfair (averaging £3,520 per sqft) and £15.4 million in St John’s Wood (averaging £2,869 per sqft).
During 2023 billionaires have been buying larger and even more expensive homes in the UK capital. In 2023 billionaires have typically spent £30 million on purchasing a London house that averages 11,200 sqft, compared to 2022 when they spent on average £21 million buying a home averaging 7,000 sqft.
Beauchamp Estates say that this uplift in value and size is because the majority of billionaire homes purchased in 2023 have been cash purchases for end use (59% compared to 47% in 2022), whereas in 2022 a significant number of purchases were for investment, either buy-to-refurb-resell or buy-to-rent transactions.
During 2023 Mayfair followed by Hyde Park have been the most popular places for a billionaire to buy a home in London, overtaking Belgravia and Knightsbridge which were the top destinations in 2022.
The Ultra-Prime Barometer Wealth Report says that London remains one of the most popular destinations in the world for billionaires to own or rent a home, with the capital’s lifestyle (quality of restaurants, cultural facilities and sporting venues), quality education, safe haven for capital and personal security being the key reasons for choosing to live in London. These attractions mean that Prime Central London residential values should rise by 10.8% between 2023 to 2027.
However Beauchamp Estates highlight that for billionaires the UK also has downsides, including Stamp Duty, excessive state scrutiny into finances and sources of wealth and worries that a change of government from Conservative to Labour in 2024 could result in rises to Stamp Duty, other wealth taxes and further regulation.
Because of this, Beauchamp Estates warn that London is facing rising competition from rival billionaire destinations in particular Dubai, the French Riviera, Los Angeles and Miami. Billionaires like the sunny weather, luxurious lifestyle and glamorous homes in each of these locations and Dubai in particular (where the level of £15 million plus home sales is double that of London) appeals due to less state scrutiny into finances and sources of wealth.
The Ultra-Prime Barometer Wealth Report highlights that a billionaire’s home on the French Riviera now commands an average value of £20.4 million (£3,873 per sqft) whilst in New York (central Manhattan) the cost of a billionaire’s home now averages £23 million (£3,757 per sqft). Demand for super-luxury homes along the French Riviera has been so buoyant that during 2023 Beauchamp Estates has opened new offices in Mougins in July and Cap Ferrat in September to add to their well-established offices in Cannes and St. Tropez.
Since the start of 2023 Beauchamp Estates observe that the most active multi-millionaires and billionaires buying (above £15 million) or renting (over £5,000 per week) super-prime homes in London by country of origin are American, Chinese/Hong Kong, domestic British, Indian and Malaysian.
Beauchamp Estates say that American and other US dollar based buyers have dominated the London sales market during 2023 for homes priced above £15 million, and have also been a significant source of deals along the French Riviera. The other key trend during 2023 has been the return to the London market of Chinese/Hong Kong super-prime home applicants and buyers in numbers not seen since before the COVID-19 pandemic.
The Ultra-Prime Barometer Wealth Report reveals that there are currently 3,194 billionaires in the world with the largest number of billionaires originating from North America, with 1,011 billionaires (31.7%), dominated by the USA (735 billionaires); the UK and Western Europe, with 933 billionaires (29.2%), with 177 of these living in London/UK, and Asia with 835 billionaires (26.1%).
The source of these billionaires’ wealth originates from banking and finance (21.1%), technology/fintech businesses (20.2%), consumer businesses (7.8%), hospitality and entertainment firms (5.5%) and real estate (5.2%).
The new report says that these billionaires typically invest 32% of their personal wealth in residential property, a combination of homes for personal use, plus residential investment properties. The remainder of their wealth is focused on equities (stocks and shares), commercial property, government bonds and venture capital.
Beauchamp Estates highlight that billionaires typically have three or more homes for personal use, with at least one in their main country of domicile and two or more overseas.
The value of a billionaire’s personal home portfolio is therefore substantial, the report shows that a budget of £62.2 million would be needed to provide them with a home in Mayfair (£18.8 million), a villa on the French Riviera (£20.4 million) and a townhouse in Manhattan (£23 million).
Gary Hersham, Founding Director of Beauchamp Estates said, “Luxury property in wealth hubs such as London, Manhattan and the French Riviera remains a safe asset class and as a result these ultra-prime markets have shown remarkable resilience.
“In the sales market the high share of cash purchases has helped to cushion the impact of higher interest rates, with American and Chinese/Hong Kong buyers being extremely active in the London market, and Americans also significant along the French Riviera. In the super-prime lettings market strong demand and soaring rents and a lack of supply have been the key features of the market this year.”
Jeremy Gee, Managing Director of Beauchamp Estates said, “Due to the quality of lifestyle, education and stability, London is seen as a safe haven for global capital and remains one of the most desirable locations in the world for multi-millionaires and billionaires to buy or rent a home and spend their time.
“However London is competing with other rival wealth hubs such as Dubai, the French Riviera and Manhattan to attract multi-millionaires and billionaires, and this is where domestic issues including interest rates, taxation and state regulation play a significant role in the decision making process. London wins if it is allowed to compete as a lower-tax, lower-regulation free-market hub.”
Erik Holmgren, Lettings Manager at Beauchamp Estates said, “The super-prime lettings market in London has boomed in 2023 with UHNWI tenants moving beyond their traditional focus on Mayfair, Belgravia and Kensington to look at letting super-prime homes in locations including Marylebone, St John’s Wood and Hampstead.
“Over the past six months Beauchamp Estates has secured super-prime lettings deals which have generated combined annual rental income of over £5.5 million, with tenants from America, China and the Middle East being particularly prominent in the PCL market over the last six months.
“In Mayfair we have let apartments to tenants from the USA and Western Europe and our lettings portfolio of houses in Mayfair and Chelsea have found favour with tenants from the Middle East and Asia. Marylebone has become a sought-after luxury lettings destination, with apartments securing tenants from the USA and China. In Hampstead houses and apartments have attracting families and students from China and Western Europe.”