Rich foreign buyers back in market for luxury homes

Developer Minerva, which is building multi-million pound homes at Lancaster Gate and has plans for an exclusive development at the Odeon cinema in Kensington, today said prices in "prime", central London are still rising after a 4% increase in April, May and June.

The rise in the second quarter and over the summer followed a 20% crash in prices since the onset of the credit crunch in September 2007.

Minerva chief executive Salmaan Hasan said the prime market was "sensitive to the success of the financial markets in the City of London" as well as the confidence of overseas buyers.

He said that after nearly two years of carnage, which sent demand and the prices of top-end homes tumbling, things are looking up.

"Over the past few months we have seen a good level of price increases across the properties that have been sold," said Hasan.

"The market has had a difficult time but in the last few months the high end market has begun to improve again and prices are rising."

He said "demand is still there for the best properties" at the very top end of the market in London — where houses cost more than £10 million — thanks to rich international buyers who do not need a mortgage.

The weak pound has also made UK property "very good value to overseas buyers".

Sterling was down 0.05 cents against the US dollar to $1.5942 today having been worth more than $2 a little more than a year ago. It is also heading towards parity with the euro.

Minerva is building 74 apartments at Lancaster Gate overlooking Hyde Park with the project on course to be completed by spring 2011. It sold 26 of the apartments for around £4 million to £5 million in January last year before property prices starting crashing. Hasan said no further sales are planned until late this year or early next year.

"We think the prices are going to get steadily better," he said. "We are confident we can get those prices again."

Minerva has planning permission to build 35 apartments and five townhouses at the site of the Odeon cinema on Kensington High Street. However, development has not started and Hasan today said he is still "reviewing our options regarding this site" — casting doubt over it will ever get built.

Minerva also has plans to develop the Ram Brewery in Wandsworth. The proposed scheme includes 1000 apartments and 200,000 square feet of retail, restaurant and office space, but it now faces a Government inquiry.

The bullish update on the London housing market — which follows positive reports in recent weeks from upmarket estate agents such as Knight Frank and Savills — came as Minerva reported widening losses.

The firm posted losses of £287.1 million in the 12 months to the end of June against a deficit of £231.9 million the previous year. The value of its property portfolio fell 28.4% to £807 million.