The good news as far as London estate agents and vendors areconcerned is that the gap has been filled by purchasers from Europe, theMiddle and Far East, and Australia. Despite the weakness of the Rand, SouthAfricans are also making an impact, as are buyers from India.

A high level of overseas demand is for investment property, which saw astaggering 23% increase in value during 2000 and is set to see a more modestjump of 12.7% this year. Paul Belson, residential research manager at KnightFrank, says, 'The first half of 2001 has been characterised by a moreprudent attitude, as purchasers have exercised a high degree of caution. Coinciding with the drop in US purchasing activity has been a rise in thenumber of Americans looking to rent in central London.'

Over the last 12 months the supply of prime rented property in centralLondon has fallen by 20%. The only exceptions have been in Canary Wharf andWapping where supply levels have soared by 15%. 'This should not give causefor concern,' says Belson, 'rather an indicator of the expansion ofcommercial property activity, which has led to equivalent demand levels fromdomestic and overseas residential tenants.'