OAKMAYNE

New developments, such as Cornwall Terrace (pictured), are being gobbled up quickly by the glut of international buyers desperate to get their hands on prime residential real estate in Central London.

1 of 6

Price tags on London’s prime residential real estate have leaped 20 percent on the year, while Russians are now the biggest buyers in the sector, which is also popular with wealthy Arabs, Indians and Americans. Properties can currently fetch up to £6,000 per square foot (more than $90,000 per square meter), making it unsurprising that the world’s richest, even more than local Brits, are driving the rise.

Low interest rates and a weaker pound are key reasons behind this soar in prices, which have risen at twice the speed of the rest of the U.K. housing market, wrote Knight Frank’s Liam Bailey at the beginning of July.

Bailey remonstrated that the London prime market is undergoing “one of the most difficult times for forecasting,” which is supported by his perception that plenty of prime owners in the city seem unconcerned with predictions of rise or fall — and are presumably bound up in the wow of the now.

A strange irony to this is that London is losing out on Russian prime buyers to equally squeezed real estate markets like Switzerland. Yet the reason is not lack of desire among the Russians, simply the lack of supply in London to cope with their high demand for the British property package. Perhaps by way of compensation, Moscow itself has long paid homage to London’s prime residential hotspots, liberally reusing names of places with perceived cachet such as Mayfair, Chelsea — or, more recently in the case of one ongoing development, Knightsbridge.

Pushing the Limit

Even in these times of high demand, low supply and careering prices in the U.K.’s capital, several record-breaking properties are entering the market, as international cash — especially dollar-dominated or dollar-pegged — waits in the wings to buy. London’s most expensive apartment block development, One Hyde Park, designed by the yawnfully ubiquitous Richard Rogers, has even been personally marketed in Moscow by Nick Candy, the developer responsible for its erection.

Newly released onto the market is also The Lancasters, a rival concept to the Rogers design but considerably more in keeping with the period feel, which is attractive for many Russians. As REC reported last fall, one Russian buyer had already snapped up 26 off-plan apartments in the building before they had even been officially put up for sale.

The former hotel building, which used to house the world’s longest corridor (but at considerable structural expense), was launched in June and the developers Minerva and Northacre to date have shifted over half of the 77 available apartments, which range from around 90 square meters to 900 square meters; recently 11 apartments each went for an average of £10 million ($15.2 million).

Despite the 19th-century facade and the cluttered show apartment in The Lancasters, there is a sense of Scandinavian refinement to the development. Klas Nilsson — a Swede, the Northacre CEO, and the lead architect on the project — is the likely explanation for this, having given the venture “about 70 percent of [his] time.”

Nilsson’s argument, and indeed justification, for this is that it will not be just an investment for whoever buys into the development, but most likely a primary residence, where, indeed, people may well spend the majority of their time. For those with a bigger family, or just plenty of paraphernalia, there are a couple of houses thrown into the complex, which was first put together as 15 separate Georgian buildings. A house in The Lancasters is priced at about £30 million ($45.7 million) and will comprise five bedrooms and cover 900 square meters.

Royal Prime

Perhaps the lost legacy of Russia’s royal family helps steer its affluent overseas investors to the most regal parts of Europe. In London’s Regent's Park area there is yet another swanky piece of prime residential about to hit the market in the form of Cornwall Terrace, just next to Baker Street.

As if the idea of living next to Sherlock Holmes is not enough for Russians — who have a particular attachment to the fictional detective because of the popular Soviet films — parties interested in buying one of the eight huge double-fronted houses would technically be making a real estate transaction with the Queen.

The Crown Estate is the leaseholder for these “residences,” which are Grade One-listed (protected) houses with terraced mews, overlooking the Regent’s Park, an area resculpted under the instruction of George IV.

The terrace used to contain the headquarters of British Land, one of the country’s largest developers. During its tenure there, British Land installed drop ceilings and knocked through some of the walls between the houses, adding to the work required to redevelop the properties into what is now their prime marketable condition.

However, the people selling the project are taking a less orthodox approach to marketing, conducting what Beth Dean of developer Oakmayne calls a “whisper campaign,” involving no advertising. REC was offered early access to the properties, which boast high-tech security systems and a guarded road at the back. Unfortunately, there was no talk of prices, due only to be decided according to interest in the project — which the developers claim is only affordable to “a small percent of the world.”

Also arguably within the realm of “royal real estate,” London witnessed a landmark legal case in June. The case centered around the intervention by Charles, Prince of Wales, in a high-profile building project in Chelsea, on the site of the former British Army Barracks near Chelsea Bridge. A consortium of buyers including Qatari Diar had paid nearly £1 billion ($1.5 billion) for the site and sought to build a series of apartments on the plot. Having considered various designs, including from — who else — Richard Rogers, they settled on a plan and developers Candy & Candy made preparations to execute the idea.

This was until Charles led a counter proposal for the design and thus stalled the planning application, which was eventually abandoned by the Qataris. For his actions, the prince was recently deemed by a London judge “unexpected” and “unwelcome,” although Charles’ aide said he upheld locals’ views in his bid to save the plot from a perceived architectural massacre.

The land remains undeveloped and unsold by the Qataris, following this clash of two dynasties in a true modern turf war.