Brimming with posh stores and elegant shoppers, New York City has always held a certain cachet. But there is something that the US's largest city can no longer claim: the world's most expensive residences.
That honour now belongs to London, the priciest place in the world to buy a luxury home. Driving the city's overheated property market are generous salaries and bonuses, plentiful foreign buyers, and a simple lack of supply. Simon Barnes, who finds properties for wealthy clients, said that at least 10 people immediately chase any house that comes on the market in London. ''It's quite frightening, really,'' he said. A recent study by CB Richard Ellis Hamptons International, a real estate consultancy, shows that the highest-end properties in London already are able to command as much as US$5,860 per square foot, while similar properties in New York City are able to garner a mere US$5,276 per square foot. Other central London properties now cost around US$2,300 a square foot, compared with US$1,900 in New York. With the pound approaching the US$2 mark for the first time since 1992, such exorbitant property prices have kept many a US expatriate at bay. ''If we were to buy in London, we would lose half our down payment money with the current exchange rate,'' said Erin Maury, a US citizen who rents a home in London. "Unfortunately, at this rate ÃÂ¢€" and with prices so high ÃÂ¢€" there is no way we can afford to purchase a home here.'' Expected to set a new price ceiling in London is a four-tower development of 80 luxury apartments called One Hyde Park that's going up in the ritzy Knightsbridge neighbourhood. The project, set to be finished in 2009, is owned by Project Grande and is being handled by Candy & Candy, a London development company known for its top-of-the-line projects. Nicholas Candy, a founding partner, said an attention to detail is one reason the company's properties achieve record properties. For example, some apartments will feature amenities like ''memory mirrors'' ÃÂ¢€" full-length video screens with a time delay, so that the reflection one views is really a shot of oneself taken 10 seconds earlier. Perks like this, coupled with the property's prime location, have many real estate agents predicting that One Hyde Park will be the first to command a price of 4,000 British pounds per square foot, or nearly US$8,000. Britain's housing market has been red hot for over a decade, with average house prices close to tripling since the mid-1990s. Price gains have even been more stratospheric in some of the best parts of central London ÃÂ¢€" neighbourhoods such as Notting Hill - where average costs have gone up by more than 240 percent. The trend has produced record average sale prices reaching $1.9 million, a rise of nearly 12 percent over this time last year. The market here has showed no sign of cooling even as markets in New York and all across the United States are seeing property sales drop to their slowest pace in years. There are several factors working in London's favour. One is the bonus bonanza expected this year for the bankers, traders, and hedge fund managers who work in London's financial district. This week the British media reported that thousands of people in the finance sector were in line for bonuses of at least one million pounds, or nearly US$2 million. ''Bumper bonuses are expected this year as London becomes the pre-eminent financial capital of the world,'' said Robert Bailey, who also finds properties for wealthy clients. ''People are finding they have lots of money in their pockets, and that there's not much to spend it on.'' Another factor: billionaire Russians who have supplanted Arabs and US investment bankers to become buyers of the most expensive properties. Liam Bailey, head of residential real estate at the Knight Frank agency in London, said that this year Russians have bought one of every five properties priced at or above six million pounds, or US$11.7 million. ''Russians have gone from nowhere to becoming the biggest single overseas purchaser group in central London,'' he said. Finally, there's the simple fact that there's just not enough supply to meet demand. Primelocation.com, a property Web site, said the stock of available property in central London is down by a dramatic 34 percent compared with last year. Since London is unlikely to build higher, there's little chance that housing stocks will grow. ''London is built low and the government has said high-rise buildings can't be created in the centre, so there is a real shortage of supply,'' Robert Bailey said. ''But other cities like Berlin can create tower blocks of hundreds of properties, so they have a huge amount of available properties.'' Facing this reality, affluent buyers in London are grabbing whatever property they can get. Mike Spink, owner of Spink Property, a London development company, said he just sold an apartment near Sloane Square for $3,800 a square foot ÃÂ¢€" and it isn't even located on a garden square or in one of London's most prestigious neighbourhoods. ''There's all sorts of evidence to show that buyers will pay whatever they have to,'' he said. ''That's why I think prices will just continue going up.'' (NY Times)