(MENAFN- AFP) Once showered with cash by wealthy Arabs, Russians and others seeking a luxury London bolthole, the capital's prime property market may finally be showing signs of coming off the boil, experts said on Wednesday.
High-end central property prices have soared in recent years as wealthy foreigners pumped millions into handsome townhouses and luxury period apartments mainly in London's fashionable West End.
But some experts question whether a bubble has formed, and as growth slows, whether it may be about to pop.
Grosvenor Group, owned by the Duke of Westminster and one of Britain's largest private landowners, said Tuesday it had offloaded some of its high-end residential properties due to concerns about values in some markets, "particularly in prime central London".
"There is a risk that a bubble is developing and that, when inevitable interest rate rises occur or a more balanced relative attractiveness between asset classes returns, equity flows will reverse, placing values at risk," Nicholas Scarles, Group Finance Director at Grosvenor Group, said in the company's 2013 annual review on Tuesday.
"We do not know when a correction will occur, but our own analysis indicates the prospect of a correction is becoming more likely," he added.
Not all experts agree a large drop in prime property values is imminent, particularly among wealthy cash buyers for whom interest rate rises and pricier mortgages are not an issue.
But there is consensus that the rate of price growth is slowing from the near-20 percent year-on-year surge seen in 2010.
Then, fears over the future of the Eurozone, driven by debt crises in Greece and other parts of southern Europe, spurred the flight of millions of euros out of the troubled region and into the relative safe haven of prime London property.
However, in recent weeks Greece returned to the international bond markets with a well- received sale of sovereign debt, while Spain's moribund economy is finally showing signs of life, new growth data has shown.
This has meant there is less money flowing into central London property from southern Europe, analysts say.
For some other buyers, luxury London prices are now simply too high.
"The prime values have reached a level now that some people are starting to balk. At the same time, we've had the appreciation of sterling," said Matthew Pointon, property economist at the Capital Economics thinktank.
"I don't think it's going to be a massive crash, more a slowdown," he added.
Property consultancy Knight Frank said annual price growth in prime central London had slowed to a steady 7.5 percent in March, compared to 8.1 percent a year earlier and 11.3 percent in March 2012.
Prices in exclusive enclaves such as Mayfair, Chelsea and Belgravia are not rising as quickly as they used to, said Tom Bill, associate at Knight Frank's Residential Research department.
"It's certainly not a market that's on fire at all... prime central London is growing less than the nationwide index," he added.
Knight Frank has seen reduced interest from wealthy Europeans fearful for their cash -- 2013 was the first time in four years they recorded no Greek-domiciled buyers.
Uncertainty over mooted tax changes are also playing a part, with property hunters holding off until after next year's general election, Bill said.
Still, the London prime property party continues for some, with a source close to the developers of London's iconic new Shard skyscraper confident they will be able to sell its 10 luxury apartments, reportedly priced at 30 million pounds to 50 million pounds each.
The source declined to reveal the price of the flats.
At Battersea Power Station, where one-bedroom apartments are set to go for one million pounds each, the developer's press office said it was too busy to comment on the state of London's luxury property market.
Elton John was due to serenade prospective buyers later Wednesday.
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