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London real estate market overview. June — July 2013.

In the last 7 months London became leader in terms of property price growth in the UK with +6%, followed by East of England with +3.6%. In general, the average real estate price in the country grew by 1.9% in June and reached a level of £ 168,941. In 10 of 13 districts homes and apartments appreciated in value last year except for Scotland, Northern Ireland and the area of Yorkshire and Humberside.

This year the highest growth rate was demonstrated by real estate units worth up to £ 1million — 6.6%, property in the price range of £ 1 million to £ 2.5 million grew by 5.4%. The «super-premium» property worth over £ 10 million went up in price by 1.5%.

According to a recent study, London again became the first in the rating of world cities that attract wealthy people with incomes of € 23 million and above. There are 4,296 HNWIs in London, most of whom are entrepreneurs having established their own business, which they either sold or became shareholders. The average assets of a multimillionaire in London make € 125 million; usually they are men with the average age of 57 years.

London Property Market Analytical Report; April – May 2013

The number of international buyers interested in investing in London property market is on the rise. More than 50% of all the deals on London properties worth more than £2m were closed by HNWI from all over the world. The most active buyers are Russians who completed 8.5% of all deals in the last 12 months, investors from United Arab Emirates, US and China – 2.8%, from India – 2.6%, Hong Kong 1.8%, Switzerland 1.1%.

Local buyers are becoming more active now. The reason being financing is very attractive due to low interest rates offered by banks. The number of active potential buyers looking for a property has reached the 5 years’ maximum. The number of applicants is 40% higher this year compared to the same period in 2012. The aims of the purchase remain the same – investment, buying the property for children and as a second family home.

Because of the limited supply and high demand fewer vendors are ready to lower the price or to accept a lower offer. The number of properties reduced in price with the asking price up to £1m has fallen to 18% from 27% in the last year; this is the lowest level in the last 3 years. And only 8.7% of prime properties have seen price reduction.

The forces listed above cause the rise of the price per square foot, especially in Prime London areas. The average prices were £2,000 per sq ft in “golden” postcodes (Mayfair, Belgravia, Knightsbridge) a few years ago however now the prices reach £4,000 — £5,000 per sq ft in super prime areas.

The Stamp Duty increase in April 2013 caused 16% decrease in the number of £2m — £3m completed property deals. At the same time the level of sales above £3m remained stable. This can be explained not only by attractive mortgage rates and low pound exchange rates, but by the plans of many buyers not only to invest in property, but to buy a place which potentially can become a home for their families in case they decide to relocate.

The UK resale property prices are currently 2.8% higher than year ago. In Greater London this index reached 7.6% level.

During the first 5 months of 2013 average London property prices increased by 3.2%, in April – by 0.7%, in May – by 0.4%.

As we have mentioned in our previous reports, analysts forecast approximately 30% rise of London property prices during the next 4-5 years.

There is a very high demand on “trophy” off-market commercial properties in prime London areas from investors from all over the world as well. Recently a deal has been agreed on a property in Mayfair with £250m asking price. The 180,000 sq ft office building is located in Grosvenor Square next to the USA embassy and will be fully refurbished by the new owner.

Disclaimer:

The information provided and opinions expressed in this report shall not be considered as advice, offer or solicitation to buy or sell real estate, securities or other investment assets, options, futures or derivatives related to such securities or investment assets. Investors should understand that statements regarding trends may not be realized.

The information and opinions contained in this document are based on sources that are reliable, yet we cannot guaranty that they are accurate or complete and should be considered as such.

This report may not be reproduced or copied (in whole or in part) without reference to the original source.

The following sources were used during the preparation of this report www.propertywire.com, www.hometrack.co.uk, www.cbre.eu, www.rightmove.co.uk, www.thisismoney.co.uk, www.moneywise.co.uk, www.prian.ru, www.knightfrank.com, www.rg.ru, www.daylymail.com, www.euromag.ru, www.londonlovesbusiness.com .

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