How high can London prices go?

There is apparently no end in sight to the prices international buyers are willing to pay for a chunk of prime London real estate.

The price of top homes in the best neighbourhoods will likely hit a record £10,000 (US$15,700) per square foot by 2016, Knight Frank predicts. To put that in perspective, as recently as 2006 £3,000 (Dh17,300) was the benchmark for top property--and that was considered outlandish.

Knight Frank studied the purchases at One Hyde Park, the Knightsbridge development developed by a company controlled by the Candy brothers and an arm of the Qatar royal family. One Hyde Park, which opened earlier this year, is considered the most expensive apartment development in the world.

One Hyde Park started selling in 2006 with apartments priced at £4,560 a square foot, busting through the previous ceiling. By 2011 prices were hitting £7,500 square foot, despite the slowdown, thanks in large part to buyers from Asia, the Middle East and Russia.

One Hyde Park has sold 62 of the 82 apartments for a total of £1.4b.

"One Hyde Park's success has been due to the fact that it was designed and executed to meet a very specific requirement from the new international wealthy," said Liam bailey, Knight Frank's head of research. "Not only did these buyers emerge from the recession almost unscathed, but so too in some ways did central London."

Prices for One Hyde Park compare to £5,171 for a choice apartment on Central Park in New York and £5,400 for an apartment in a top building in Monaco.

Far from representing the top of the market, One Hyde Park is more a sign of things to come, Mr Bailey said. More developers will likely try to tap the high end market and push the envelope, especially with very few properties in that class currently available.

"In key markets like London the availability of top-end developments that attract wealthy international purchasers is still very limited," said Liam Bailey, Knight Frank's head of residential research. "The opportunity for developers to capitalise on this market is therefore a real option."