» Global gloom, capital's property market booms
Straits Times: Mon, Nov 21
EURO zone crisis? Greek meltdown? Uprisings in the Middle East? It's all good news for the London property market. While the rest of Britain struggles - house prices fell an annual 1.3 per cent nationally last month, and by 2.7 per cent if you e...
EURO zone crisis? Greek meltdown? Uprisings in the Middle East? It's all good news for the London property market.
While the rest of Britain struggles - house prices fell an annual 1.3 per cent nationally last month, and by 2.7 per cent if you exclude London - in the capital, the party is rocking.
You want an apartment with an underground carpark configured for Maybachs? You'd like your local takeaway to be from multi-starred British chef Heston Blumenthal? Perhaps your specifications include eel-skin walls, gold-resin ceilings and, most important of all, bomb-proof windows. Welcome to super-prime London.
Of course, savvy buyers from Hong Kong and South-east Asia who are merely well-off have been snapping up apartments here for some time. They buy off-plan in their home cities, from British developers and estate agents who set up exhibitions at smart hotels and offer complete packages that provide everything from bedside tables to mattresses and cutlery.
These emerging-market clients buy as investors who see the upside potential of a weak sterling, and they are certainly keeping the central London market busy. But they are not the people now flooding into London, whose entry-level properties tend to be pound10 million (S$20 million) at least.
These people are so wealthy, you may well wonder how they amassed their billions. The clue could be in why they are looking for a safe haven.
Political upheaval? Perhaps you are a refugee from regime change with 10 per cent of your country's gross domestic product in a briefcase, or even just an oligarch needing to spread your bets. Well then, London's top apartments at pound7,500 per square foot feel just right, as do whole floors and buildings either around Bond Street or in the financial hub of the City of London.
Banking crises? Wealthy Greeks have been stealing money out of their country's institutions and, like the Arabs and Russians, are buying prime-location London real estate, both residential and commercial.
Economic gloom? Even the French have been buying in this capital. If you have any worries about the future of the euro, maybe the time to transfer out of the currency is now. In fact, the British who bought homes and second homes in Provence and the Mediterranean are now selling these and moving back.
And those who live in China, far from euro zone fears, have economic anxieties of their own: high inflation for instance, whereupon London, where inflation is expected to be within 2 per cent by the end of next year, seems very appealing.
The super-prime favourites are Westminster - which includes the most expensive real estate around Hyde Park - and Kensington and Chelsea. Savills estimates that pound6 billion has flowed into the central London property market from abroad over the past 18 months. Knight Frank's prime central London index shows that prices are now at a record - up 12.5 per cent over 12 months, and more than 38 per cent since its 2009 low.
This is in stark contrast to the rest of the country, and especially in the north of England, where prices are falling even before one factors in inflation, currently about 5 per cent.
It is not only a bleak outlook that is holding back buying in the rest of Britain - the Bank of England has just downgraded its growth forecast for this year and next to 1 per cent - but also the lack of mortgages from banks.
It couldn't be more different from central London, where the penthouse of luxury development One Hyde Park was sold not long ago to a Ukrainian billionaire for a reported pound136 million. He would have paid cash.
Hakkasan in Hanway Place is an uber-trendy Chinese restaurant where 1.8m-tall blondes with bosoms to match are taken by their beaus for a late supper. It is expensive even by the standards of a friend lucky enough to dine there more than occasionally. She was there last month, and her complaint was that you couldn't move for the ultra-rich Russians and Chinese crowding the place.
There is some trickle-down effect from all this activity to London areas away from the prime centre. Some local friends who wanted to downsize were feeling despondent because of the lack of interest in their house. Just as they had given up hope last month, they had two competing buyers. Suddenly, estate agents' signs around our London village nearly all seem to say 'sold'.
Buyers from the former Soviet Union, China and India make up for most of the super-prime market at the moment. According to Knight Frank, Russians alone account for 14 per cent while the mainland Chinese, nearly non-existent before last year, are catching up fast.
But if things continue to be bad elsewhere, they could soon be ousted by the Egyptians, Tunisians, Turkish, Syrians, Italians and Spaniards. In fact, Knight Frank reported that last year, it sold multimillion-pound properties to about 50 different nationalities.
To think that, three years ago, when the Labour government wanted to bring in an annual pound30,000 charge on non-domiciled residents, there was hysteria that they would all take off for Geneva. They're certainly back now, with plenty of spare change for the Chancellor.
The writer is a Singaporean based in London.Source: The Straits Times