The area's average residential prices rose by 7% in 2011 and a staggering 25 per cent since 2009 with prices forecast to increase by a further 7 per cent during 2012, driven by eurozone money and strong domestic demand.
The lettings market remained strong with a 3.7% increase in average rents in the first quarter of 2012 with international tenants playing a major role, accounting for 68% of properties let.
Lisa Hollands, EA Shaw's Head of Residential, said:
"International buyers, particularly from the eurozone, are playing an increasingly important role in the central London residential market, which is now considered as a safe haven for wealth rivalling that of traditional prime West End locations. Looking at the continued political and economic instability within Europe, the residential market is set to strengthen further during 2012."
This resilience in the market is demonstrated by one record deal in Covent Garden, where £2,676 per sq ft was achieved for an apartment at Capco's The Henrietta scheme.
Driving the price rises is limited supply of quality property and strong demand from the flight of euro money to what is perceived as the safe haven of prime central London property, combined with steady domestic demand. During the first quarter of 2012 eurozone buyers were the most dominant of international buyers, accounting for 36% of all purchases. Purchases were split between 56% international and 44% domestic buyers. Investment purchases comprised 38% of the total.
Domestic UK buyers dominated the resale or second hand market, being responsible for 67% of sales, but only represented a fifth of new build sales where international demand was the most important.
In terms of purchasers' professions, financial and legal were the majority at 55%. Such buyers sought pied-à-terres in locations with good investment potential, within easy access of work and transport links to family homes for the weekend.
EA Shaw's research covers an area of prime central London including Covent Garden, Soho, Fitzrovia, Bloomsbury, St James' and the City fringes.
