(April 13): Kensington and Chelsea has long attracted high-earning workers willing to pay exorbitant housing costs to live in one of London’s most glitzy districts. Now they are leaving in their thousands.

The so-called Royal Borough and neighboring Westminster each lost about 4% of their employed residents over the past two years, or more than 6,000 people combined, according to official figures. Adding Hammersmith & Fulham, Camden, the City of London, Islington and leafy Richmond reveals an exodus of about 11,000.

The declines contrast with the majority of London’s 33 local authorities, where the number of payrolled employees has risen, and the UK as a whole. It suggests that flexible working, cost-of-living pressures and the lure of jobs in places like Dubai and Abu Dhabi are drawing workers away from areas of the capital, where houses sell for millions and tenants can spend half of their income on rent.

The median house price in Kensington and Chelsea — famous for its upmarket shops, museums and billionaire mansions but also home to pockets of poverty — is about 27 times the full-time median earnings of its residents at £1.2 million (US$1.6 million, or RM7.07 million). Rents are equally eye-watering after a rise of around 25% in the past two years.

Six-figure salaried Londoners in search of space have taken advantage of post-pandemic work freedoms by moving to hot spots such as the Cotswolds, a picturesque area less than 100 miles (161 kilometres) west of London, whose honey-coloured stone villages and famous residents frequently make the pages of British lifestyle publications.

“They may still have a pied-a-terre in Kensington, they may spend one or two days a week in London, but they may well consider their core home now genuinely the Cotswolds, where that was probably their weekend place before,” said Robert Salter, global mobility director at business advisory firm Blick Rothenberg.

For some, changes in the high-end job market are dimming the appeal of London. Employers in finance and insurance are tightening their belts in response to global turbulence, according to Seemanti Ghosh, principal research fellow at the Institute for Employment Studies. That means scaling back hiring, relocating jobs to cheaper locations outside of London, and turning to automation.

“In terms of the jobs market, there’s no doubt that the market has shrunk,” said Elliot Jackson, director at recruitment consultancy Robert Walters in London. “It’s a domino effect.”

Companies in the Gulf are happy to take up the slack to boost their expansion plans. Tarun Tawakley, employment partner at law firm Lewis Silkin, said he has seen a “strong increase” in the number of UK employees, particularly in financial services, being poached for roles in Dubai and the United Arab Emirates.

“They feel the balance of having lower, or no, taxes, and paying for these sorts of benefits” such as healthcare and schools “gives them a better quality of life,” he said.

The loss of demand is being reflected in the prime London property market, where prices fell significantly last year. Kensington & Chelsea and Westminster had the biggest discounts to asking prices in the UK in 2023 and 2024, according to data firm Hometrack. Homes in the former took longer to sell than in any part of the country last year.

Jeremy Gee, managing director at London broker Beauchamp Estates, says domestic residents in central London have steadily been replaced by international buyers. Over the past decade, luxury home purchases in Chelsea, Mayfair and Knightsbridge have been dominated by American, Middle Eastern and Asian investors who are either employed or have their business interests outside of the UK, he added.

Foreign buyers purchased 37% of homes sold in central London’s most affluent postcodes in the first quarter of 2024, according to the most recent data from Hamptons. Those investors have been less exposed to the mortgage-rate volatility and cost-of-living crisis witnessed in the UK over the past few years, the broker said, though tougher taxes under Britain’s Labour government has weakened overseas demand.

“Their London home is typically not their main residence and is part of a global portfolio,” said Gee, who believes the decline in the number of payrolled employees in Kensington & Chelsea and Westminster will continue. “This shift in homeownership from domestic to international has resulted in a large swathe of prime central London becoming a globally influenced bubble.”

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