London Apartments

London apartments are now the most expensive luxury residential real estate in the world according to a report published last week by CB Richard Ellis. The report showed that prime residential real estate in Neighborhoods such as Chelsea, Belgravia, and Notting Hill has been selling for an average of $2282 per square foot (19,200 euros per square meter) vs. New Yorks prime real estate off of Central park which is only fetching a Paltry $1900 per square foot (16,000 euros per square meter).

The nosedive in valuation of the US Dollar certainly isn't helping the situation, but a couple of other factors are effecting this. According to economists from Nationwide Building Society a lot of the demand for this prime real estate is coming from new rich oil money. Most of the new buyers are coming from Russia and the Middle East. That being said, currency is certainly the strongest factor at play here. If you take the current prices and go back to 2003 when the average exchange rate was USD 1.58 per one pound and plug in the latest sales numbers, New York would still be the most expensive.

Those waiting for "Bubble to Burst" in Manhattan are going to have to keep waiting. There have been 17 interest rate increases and a 15% slowdown in number of sales. Yet this has done nothing to negatively effect prices which are essentially flat with those of last year. Meanwhile in London the Froth continues to bubble. Prices in 2006 are averaging 15% higher than last year. This could be coming to an end soon as the bank of England just raised rates last week to 4.75% from 4.5%.

Another factor driving London real estate prices higher is their low unemployment rate coupled with their newly adopted open immigration policy with EU member countries. Citizens of poorer eastern european countries such as Poland can move to London with no special documentation or visas necessary. In Poland the unemployment is rampant yet in London the Unemployment continues to come in below 5%.