London’s traditional elite, such as lawyers, architects and academics, are being pushed out of their enclaves in Mayfair, Chelsea and Hampstead by an influx of global super rich investors, causing a chain reaction of gentrification across the capital, according to research by the London School of Economics.
An influx of extremely wealthy overseas buyers is leading the old elite to sell up and move from London’s most exclusive postcodes and buy in areas they previously considered undesirable, said Dr Luna Glucksberg, of the LSE’s International Inequalities Institute.
This displacement of old money and affluent middle class professionals is in turn pricing neighbourhoods in south and east London out of the reach of average Londoners and threatening to push those on low incomes to the margins of the city and beyond, she added.
“The changes happening at the top end of the market are real, and although they do not affect large numbers of people directly, the ripple effects they generate do resonate across London,” Glucksberg said.
“In terms of the impact on London as a whole, this represents a very different kind of ‘trickle down’ effect from what politicians across the spectrum have long argued would be the benefit of the ‘super rich moving into our city’,” said Glucksberg. “Affordability for average Londoners in the rest of the city is likely to become an even more difficult issue to solve.”
The trend was contributing to dramatic house price rises in areas ranging from Battersea and Clapham to Acton, as the old elite bought property there with the significant profits – usually in the millions – made from selling up to the global uber wealthy, the researcher found.
“The study shows that the wealthy individuals and families that live in London’s most exclusive areas no longer feel able to compete at the top end of the capital’s property market,” said the researcher. “Instead they feel like they are being pushed out of elite neighbourhoods. For the first time, this elite group are buying flats for their children in areas they never would have previously considered.”
Glucksberg, who previously spent seven years researching London’s most deprived estates, said while the displacement of wealthy residents might not inspire sympathy the trend illustrated the deep social impact of the global super rich on the city.
“If wealthy Londoners feel powerless to resist the global super rich what hope do the women of Focus E15 have?” she posed, referring to the young mothers from Newham who were threatened with eviction from their hostel and advised they would be resettled as far away as Birmingham or Manchester.
The researcher added that international buyers of luxury high rise apartments did not want social housing on site and developers did everything to shift social tenants off site.
London is home to around 4,900 “ultra-high net worth” individuals, with assets of at least £23m, a rise of 39% in the past decade, according to the latest wealth report by estate agents Knight Frank. In central London, overseas buyers bought as much as 85% of “prime’” properties worth at least £5m in 2012-13 and nearly all those worth more than £10m, according to estate agents LPP.
One family interviewed for the research, presented on Wednesday at the Royal Geographical Society annual international conference, said they had recently sold their home in South Kensington to an international banker and were moving out of London. But they had helped their son buy a house in Acton.
“The consequences are clearly further property price increases, gentrification and ultimately displacement in areas of London that are not ‘elite’ or prime at all,” Glucksberg said.
This process of displacement by Middle Eastern, Asian and East European buyers was leading to feelings of “both overt and covert racism”, she added.
The old elites also felt driven out of their traditional enclaves by the impact of the global super rich on the local environment, such as the proliferation of mega-basements, which led to considerable distress for longstanding residents. Glucksberg said a university lecturer in Highgate told her they were unable to cope with the years of drilling and digging under neighbouring houses.
Karen Buck, MP for Westminster North, who has dealt with dozens of cases of neighbours affected by iceberg basements (where so much of the home is hidden underground), said: “It is profoundly damaging to the fabric of London life when the people who make up the city’s workforce are priced out or see their children priced out of London. It leads to sterile communities and neighbourhoods that are scarcely lived in.”
Richard Webber, managing director of data analytics firm OriginsInfo.Ltd, who co-authored a report on the impact of the super rich on Highgate, said the displacement of middle class professionals also contributed to the decline of high end local shops and services.
He said: “The old elite would have bought their curtains and food locally. Now the hairdresser comes to you, the food is delivered. Even going to restaurants – chefs come and cook [for the super rich] in their house.”
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