The scarcity, enduring popularity and increasingly eye-watering prices of prime central London residential property mean that it should now take its place alongside other investments of passion like jewellery and art, according to London Central Portfolio, the asset management firm.

The central London property market has been red-hot in recent years as investors have sought “safe haven” assets amid the global economic turmoil – and the capital also consistently ranks among high net worth individuals’ top places to make their home. In fact, such is the demand for central London property that commentators have warned that supply could effectively “dry up” in just 15 years.

Naomi Heaton, chief executive of LCP, argues that it is "no longer credible to view prime central London property as part of the UK housing market" and that it should instead be considered as an investment of passion for several reasons.

The first is its scarcity and the fact that people tend to hang on to prime central London property once they acquire it. The area designated Prime London Central encompasses just six square miles surrounding Hyde Park (representing only 215,000 households). This situation is not going to change anytime soon either as limited building space mean that developers struggle to bring new residential units to market and property turnover is low. Turnover has in fact fallen markedly in recent times with just 100 properties a week changing hands in the 12 months to Q1 2012 – a 60 per cent drop from Q1 2000 – according to LCP’s figures.

In addition to its rarity, the prestige of owning prime central London property can only go up in light of the forthcoming Olympics being held in the city – and this means that the already huge sums being paid for such residences are likely to rise even higher, LCP says. Of course, there have already been examples of immense sums changing hands; last year a record-breaking £136.4 million ($212 million) was paid for the penthouse of One Hyde Park in Knightsbridge.

If one accepts that prime central London property now warrants the appellation, then the asset class is comparing very favourably indeed to some other types of passion investment, LCP notes. While the Mei Moses All Art Index has shown an average return of 7.8 per cent over the last 10 years, the firm points out that its newest residential property fund has risen 23 per cent in the past 12 months.