Britain may be in recession, but business is booming for Rupert des Forges, a real estate agent in one of London’s most expensive neighborhoods.
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One Hyde Park, the world's most expensive apartments, designed by Richard Rogers, opened in 2011, London.
He expects it will take just a few weeks to find a foreign buyer for a 1,530 square-foot, or 140-square-meter, apartment within a mansion, with concierge, in South Kensington that is listed at £3.25 million, or $5 million.
Someone recently bought two larger properties nearby for around £7.5 million apiece.
The buyer was an investor eager to move cash out of the euro zone — in that case, Italy.
From Italy, Greece, Spain and other countries in the European currency union, the affluent these days are moving money into hard assets valued in something other than euros , which have been plunging in value.
Expensive London apartments, valued in pounds , fit the bill nicely.
“Interest from buyers is closely connected to the politics of Europe,” said Mr. des Forges, a partner at the Knight Frank agency who has been in real estate for 23 years and who said he has “never worked harder.”
Flight of cash now poses one of the big financial risks for the euro zone. According to Spain’s central bank, a net €66.2 billion flowed out of the country in March, the most since records started being kept in 1990. And analysts expect signs of an even brisker outflow when new data become available.
Although prime London real estate has long been an attractive investment for the foreign wealthy — whether inRussian rubles, Chinese renminbi or Saudi riyals — more buyers from Continental Europe now seem eager for sterling-denominated properties. They are aided by the European Union’s guarantees of free movement of capital among its 27 members, making it easy for the rich to shop across frontiers. And they are abetted by London realtors who specialize in foreign investors.
It is not only the euro zone’s biggest trouble spots that are sending money London’s way. French investors also are seeking havens in Kensington and Chelsea, Mr. des Forges said. So are buyers from Germany, whose banks and bonds are widely considered safe harbors in the euro zone.
In this part of London, close to the Royal Albert Hall, most of the purchasers of similar apartments are foreign and more than half are from the euro zone, according to Knight Frank.
“Safe-haven flows associated with fears about a messy end to the euro debt crisis have boosted prime central London property prices over the past two years,” according to a report published last week by Fathom Consulting and commissioned by Development Securities, a property developer here.
Foreign buyers were not willing to talk about their purchases for this article, and real estate agents spoke on condition that their clients not be identified.
With all the upheaval in the euro zone, buyers from the region have the long-term worry that a break-up of the currency union, if it came to pass, would result in their assets being re-denominated in a new, devalued currency.
But even shorter term, with the euro’s value now near two-year lows against the dollar and the pound , and no bottom in sight, they see a de facto devaluation already under way.
Euro zone buyers have helped push up the average price of a home in the exclusive borough of Kensington and Chelsea to more than £1 million for the first time, put over the top by a 3.6 percent increase in April.
By contrast, the value of a home in England and Wales as a whole declined 0.3 percent in the same month to an average of £160,417.
As ritzy areas like Knightsbridge, Kensington and Chelsea de-couple further from the rest of the country, the average prime property in central London fetches around six times as much as the average property across Britain as a whole, according to the Fathom Consulting report. That multiple is at a record level, the report says.
“Prices are now far above the level they reached at the height of the bull cycle in 2007, prior to the crash, and in contrast to residential markets in the rest of the U.K. have resisted any major volatility and pricing weakness,” the Fathom report says.
The report values the stock of prime housing in London’s most desirable postal codes at around £130 billion and said prices there had outperformed greater London by 30 percent and Britain as a whole by 34 percent over the past three years.
The report also offers a warning: A collapse of the euro could send the London pricing trend sharply into reverse if the pound gained too much strength and global property prices crashed.
For now, however, it seems safer than the alternatives for buyers from the euro zone.
Whether for owning or renting most investors want apartments on one floor with high ceilings, a concierge and, ideally, a balcony or terrace, Mr. des Forges said: “It’s what people are used to in Barcelona, Paris or Milan.”
Georges Verdis, director of London Executive, a real estate company in London that was set up 20 years ago by his family from Greece, said the peak of Greek interest was in 2010, when his firm managed more than a dozen sales a month.
That figure is now at around five transactions a month, he said, and at the top end his Greek clients are cashing in on gains made in the past two years while keeping the proceeds in Britain.
Meanwhile, less wealthy Greeks are buying apartments worth less than £500,000, also in prime locations, which they aim to rent out.
But Mr. Verdis said that he had instructions to buy five large family homes worth tens of millions of pounds in central London if Greece has to leave the euro after elections that are to be held on June 17.
His clients fear severe social unrest if there is a default and a messy exit from the currency, he said. “They will close up their homes in Greece,” he added. “Their money has already been wired outside the euro zone.”