As pension savers mull how to spend their unlocked retirement savings, one property firm is going for broke on buying up Central London flats as investments.
Shoebox flats hardly big enough to swing a cat are currently selling for around £1.5 million in the very best post codes in the capital.
But property firm London Central Portfolio is putting together a £100 million war fund to buy them up at bargain basement prices after doing some math.
The firm reckons the prices of these flats have increased an average 9% a year for the past 40 years – and can see no reason why that growth should halt.
And that would make a one-bedroom pied-a-terre worth a jaw-dropping £50 million in 2050.
The firm is picky about locations; only streets around Hyde Park and from Notting Hill to Pimlico fit the bill.
Investment director Hugh Best said: “We believe the figures are sustainable and as they have been moving at the 9% rate for four decades, we can’t see what might happen to make them change.
“London is the safe haven property destination for the world’s wealthy, especially when they have trouble at home.”
Meanwhile, the Knight Frank Prime Global Rental Index for 2013 shows rents for prime London properties have dropped by 2.5% as tenants who mainly work in banking and financial services have suffered from pay cuts.
The report looks at prime rents in 17 cities around the world and shows they have increased an average 4.8%.
Cities with the most growth are Nairobi, Kenya (26%) and Dubai, United Arab Emirates (14%).
“Prime rents are inextricably tied with how the top end of the job market is performing in a city,” said the report. “Firms are moving in to Nairobi and Dubai, pushing up demand and rents, while in London, the jobs and wages are under pressure.
“To illustrate the point, Manhattan, New York, saw prime rents go up 3.5% as Wall Street bonuses increased by 15%.”