Prime London feels the "Crunch"

One Hyde Park

According to the Telegraph, the sale of a £36 million apartment in central London has fallen through, just days before completion. Situated in The Knightsbridge, one of London’s most prestigious residential buildings, the 6000 sq ft apartment went under offer earlier this year and contracts exchanged in June. But the buyer has now pulled out and the five-bedroom apartment, which has views of Hyde Park plus a spa, gym and pool, is expected to be launched onto the market for £33 million in January 2009.

However the chances of it selling for a similar amount have diminished; the prime London market has seized up over the last few months, and the amount of stock on agents’ books is mounting (6 per cent more than this time last year). Primelocation.com’s price index for November showed an increasing number of sellers discounting their properties and things aren’t expected to brighten up in the near future, due to small city bonuses.

“The collapse of Lehman was the day the music died for the top end of the super prime London Market.” says Roarie Scarisbrick from Property Vision.

Andrew Smith of Primelocation.com says: “In recent year agents at the top end of the market have spent November and December fielding a flood or enquiries from City buyers looking to spend large bonuses on prime properties. This year it is very different.”

With £3.6 billion expected to be given out in bonus money this year, compared to £8.5 billion last year, Smith believes the prime property market is in for a tough time in 2009. “London is expected to experience a significant downturn and we can expect this to have an impact on the country market as well,” he says.

According to Scarisbrick, activity in the super prime bracket is largely driven by international buyers making the most of the weak pound, and is limited to areas such as Knightsbridge, Belgravia and Kensington.