Nick Candy is the property developer behind central London
's One Hyde Park (Reuters)
Noted property developer Nick Candy is the latest person to warn that central London's eye-wateringly expensive prime housing market, favoured by wealthy Arabs and Russian oligarchs, is at risk of oversupply.
Foreign investment in central London property, considered a recession-proof asset class, has driven up house prices in the area and surrounding boroughs.
In an interview with The Times, Candy highlighted seven developments in Mayfair alone with an average sales price of £20m for the more than 200 new apartments being created.
"There is risk that if these schemes are not differentiated enough or do not gauge the needs of their target buyers correctly, there will not be enough demand," said Candy, whose Candy & Candy firm was behind the One Hyde Park development, which claims to be the most expensive block of flats on the planet.
He added that buyers could "start playing developers off" to force down prices and that there is "no proof" that the demand exists for the number of flats being built in Mayfair.
Candy's comments follow a report by estate agency Savills that warned of oversupply in central London after a flood of investment and new developments all seeking to charge current prices.
"Some of that stock justifies the price but we are worried that not all of it will," said Susan Emmett, director of research at Savills.
Savills had said in late 2012 that there was no threat of oversupply in central London, but the picture has since changed.
Over £7bn of foreign investment plunged into the central London property market in the past year. Two-thirds of the property owners do not live there, but use it as an investment.
To crack down on foreign speculators in London property, which pushes house prices up for everyone else in the English capital, Chancellor George Osborne will start charging non-resident owners of UK homes Capital Gains Tax (CGT) when they sell up.
He unveiled the measure in his 2013 Autumn Statement. It will come into force from April 2015.
"Britain welcomes investment from overseas but it's not right that those who live here have to pay CGT, but those who are non-residents do not," said Osborne.
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