Is investing in London’s prime properties really as safe as investing in gold?

For centuries many have put their trust in gold to always retain its value and protect them against inflation. The value of gold has increased by almost 100 times since the beginning of the last century. Today, an ounce of gold is still sufficient for a gentleman to be suited and booted nicely.

There are many similarities between gold and prime London properties. They are both tangible and unlike shares they do not lose their value because of incompetent managers. Unlike perishable commodities, property and gold last forever. They are both limited in supply and protect against inflation and economic uncertainty.

Throughout my 30-year career in the property industry, I have witnessed foreign investors’ absolute belief that investing in London’s prime residential properties is failsafe. It is this continued foreign interest that has helped to give London’s prime properties a status that in the eye of many is as good as gold.

Continuous strong demand from foreign buyers looking for a safe haven, coupled with a very limited supply of new properties due to strict planning regulations, has resulted in a phenomenal growth in the value of London’s prime residential properties. To illustrate, in 1981 I sold an apartment in Kensington next to the Albert Hall for £300,000 the equivalent of roughly 1500 ounces of gold. Today the same apartment is valued at £10m or approximately 9000 ounces of gold.

As the above illustration shows, over the past 30 years London’s prime properties have out performed gold many times over. Although gold and prime London properties have many attractions in common, property also fulfills a basic human need - it provides a roof over people’s heads. I therefore believe for long-term investors, prime London properties will not only prove as safe as gold, but that they will out perform gold once again in the next 30 years.

Mamad Kashani Akhavan