£100 million down: Why are billionaire buyers snubbing London's mega-mansions for Dubai?

London’s ultra-prime property market is having its lunch eaten by Dubai, according to a new wealth report by Beauchamp Estates.

There were £731 million worth of deals agreed for homes priced above £15 million in Prime Central London (PCL) in the first six months of 2024, the estate agency’s Billionaire Buyers in London survey found.

That’s almost £100 million less than the £829 million of ultra-prime property deals agreed during the same period in 2023.

The number of deals made was slightly up, with 46 deals made between January and June 2024 versus 45 made between the same dates the previous year. However, the average spend on a PCL home was down from £18.5 million to £16.56 million.

There has also been a drop in the number of speculative investors, who would be buying £15 million-plus properties to refurbish and sell for profit.

Billionaires opt for Dubai penthouses

“During the first half of 2024 multi-millionaires and billionaires have downsized their residential real estate investments in London,” said Paul Finch, director at Beauchamp Estates.

“[A] big reason is global choice and competition from other wealth centres such as Dubai, Miami and the French Riviera,” Finch explained. “The typical billionaire spends around £100 million of their overall wealth on property and currently what they are doing is buying pied-a-terres in London, but alongside this they are purchasing big villas and penthouses in Dubai, taking advantage of the Emirate’s current property boom.”

Last year, billionaires were spending in the £25 million to £45 million-plus range for London mansions they planned to use as their main residence, said Finch. There were even “several” purchases over £100 million made, located in Regent’s Park and Mayfair.

“This year the highest demand and majority of sales have been in the £15 million to £25 million price range, driven by American and Middle East buyers who have been purchasing spacious pied-a-terre apartments ideal for occasional stays,” said Finch.

Over 9,500 millionaires left the UK for Dubai, Paris and Florida last year, according to the Henley Private Wealth Migration Report.

Wealthy buyers are drawn to Dubai, Beauchamp Estates reports, as its luxury housing market is currently particularly buoyant. Residential property prices in the capital of the Emirate of Dubai have risen 20 per cent since 2020. There were twice the number of homes priced at over £15 million in Dubai versus London in 2023, and the number of deals made rose 30 per cent.

Speculative investors are buying homes in Dubai to flip them for profit. Dubai is currently leading the the global ranks of super prime sales with 105 agreed in the first quarter of 2024, according to the most recent Knight Frank Global Super Prime Intelligence report.

London buyers await tax news

The French Riveria is also proving a popular location for Ultra High Net Worth (UHNW) property investors. Beauchamp Estates’ French offices reported that prices of homes valued above €15 million (£12.85 million) rose 20 per cent on average between 2019 and 2023.

Meanwhile London’s PCL market is still hampered by uncertainty over what kind of taxation system the new Labour government might bring, particularly regarding non-doms.

“We are still seeing offers on the big houses and mansions but the offers are substantially below the asking prices so are not being accepted by vendors,” said Finch. “Clearly potential buyers are trying to factor in Stamp Duty and taxation changes into their offers in order to derisk their purchases.”

However, it’s not quite over for PCL in 2024.

“During 2023 some of the biggest deals in London were agreed during the last quarter of the year. Super wealthy buyers had reviewed properties earlier in the year, but final offers were only agreed towards the end of the year,” explained Finch. London’s most expensive sale of 2023, the purchase of a £138 million Mayfair mansion by Indian vaccine heir Adar Poonawalla, was only agreed just before the Christmas break.

“This year there is clearly pent up demand due to the pause generated by the UK General Election so now that we have a new government with a strong majority, providing political stability for the next five years, it is likely that we could see a repeat of 2023 and a strong flurry of sales and big deals towards the end of 2024.”

Trump win could boost London market

Political instability in the US could also contribute to a surge in London sales, Finch speculated. Americans are some of the top buyers in London’s ultra-prime market, alongside those from India, Saudi Arabia, the United Arab Emirates.

“Given the faltering Presidential campaign of Joe Biden and the failed assassination attempt on Donald Trump, which has stunned America but will energise Trump’s MAGA base, it now seems a certainty that Trump will win the Presidential Election and become the next leader of the United States,” he said.

“Last time Trump was in power we saw a significant 20 per cent upturn in wealthy Democrats buying £15 million plus homes in London and the South of France to live out the Trump administration and we are likely to see a repeat of this American buyer influx into London and the Riviera when Trump comes to power.”