I wrote this article in 2011 for Gulf Life about London’s super-prime property market.
They call it super-prime. That’s the end of the London property market that starts at £15 million and goes as high as £150 million. It’s a market that operates in isolation from the rest of London and it’s one that is dominated by an international clientele, with buyers jetting in from the booming economies of the Far East, Russia and the Middle East. So what do they get for their bucks?
‘Buyers at this end of the market all have five demands,’ says Giles Hannah, who oversees the European operation of Christie’s Great Estates, the property branch of the venerable auction house, ‘security, space, parking, location and luxury features.’ Christie’s is currently selling a mansion on Cornwall Terrace, a dramatic John Nash-designed sweeping terrace overlooking Regent’s Park. It boasts six bedrooms, a home cinema, gym, steam room, study, state-of-the-art kitchen, mews house for staff, garage with blast-proof doors and majestic views of a royal park. Floors are covered by Italian marble, dark oak or silk carpet, there’s a chill room for furs and the walls are covered with paintings by Picasso and Damien Hirst on loan from the auction house. It’s yours for around £30 million.
‘This property was bought and developed in 2008,’ explains Hannah. ‘There are eight on the terrace and they are being released house by house into the market. London remains a key place to buy and although it’s been a difficult market since 2008, there are enough international buyers around. There are 1,100 billionaires in the world, all capable of purchasing a £30m house in any climate.’
The address they all want is Knightsbridge, which partly explains the prices fetched at One Hyde Park, a development by Christian and Nick Candy. One Hyde Park is a gleaming Richard Rogers-designed tower of luxury that sits almost above Knightsbridge tube, with Hyde Park on one side and Harvey Nichols on the other. A penthouse is said to have sold for more than £100 million and, according to Savills, the selling agent, 60 per cent of the 86 apartments have been snapped up.
A five-bedroom apartment costs upwards of £50m and takes up an entire floor – around 10,000 square feet. The hallway stretches the length of the flat from master bedroom to reception room, one end overlooking the park, the other Knightsbridge. To give an idea of the scale, a baby grand piano in the corner of the living room looks like a coffee table. Off the corridor are a further four bedrooms, two reception rooms, a TV room, study, dining room and two kitchens (one for staff). The building contains a squash court, 22-metre pool, games room, party room and meeting room.
‘You don’t need to leave the development,’ says Ned Baring, Associate Director of Savills. ‘You can live, work and play here. What makes this different to other complexes is that we have 50 dedicated staff at the Mandarin Hotel next door who can provide any service you need, from setting up a dinner party to doing your dry-cleaning. It’s like living in the best hotel in the world, but with your own private residences.’
The Candy brothers have invested a fortune in One Hyde Park – how much, nobody will say– banking on continued high demand for super-prime London property. ‘In the morning you can speak to Asia and in the afternoon you can speak to New York,’ says Baring. ‘There aren’t many cities where you can do that. You might not be here 365 days, but you need to be here.’
Hannah says much the same, ‘Your average Christie’s client will be ultra-high worth and may use this property just a couple of times a year. They’ll also have a place in the south of France, one in New York and a chalet in Courchevel.’
If the ostentation of One Hyde Park doesn’t appeal, a short stroll away – but crucially, still in Knightsbridge – you’ll find the discreet charm of Ovington Square, a classic London garden square located between South Kensington, and Chelsea. ‘This part of Knightsbridge is very popular with Middle Eastern buyers, especially from Qatar, Lebanon, Syria and the UAE,’ says Noel De Keyzer of Savills. ‘They like traditional houses, and will come in the summer to avoid the heat at home.’
The house, refurbished in 2008, was recently rented by a Lebanese family (another renter was Bill Gates), but is now on the market for just under £20 million. The selling point is the vast two-floor pre-war extension taking up the entire back garden, itself the size of a normal house. This holds the reception room and master bedroom. The five-bedroom house also has a sub-basement beneath the lower-ground-floor kitchen, containing a gym and steam room.
‘This end of the market stayed very strong in 2008,’ says De Keyzer. ‘But in 2009, it was dead. People weren’t buying. It picked up again in March 2010, helped by weak sterling.’ The problem now is one of supply. ‘There will be an acute shortage of properties in 2011,’ says De Keyzer. ‘A lot of vendors don’t think they’ll realise their expectation because the super-prime market is still 10 per cent below its peak in 2008. You are dealing with very affluent people who have no need to sell in an uncertain market, and if they’re selling to buy somewhere else, they have nowhere to go.’
There are, according to Hannah, only three developments ready for the super-prime market: Cornwall Terrace, One Hyde Park and The Lancasters. The latter is a fascinating project on the north side of Hyde Park in Bayswater. A regal Victorian terrace has been transformed. The old building behind the gorgeous Grade II-listed facade has been knocked down and replaced by an impressive new complex of 77 apartments, retaining the original front with its huge windows and exceptional views of Hyde Park.
‘These buildings were built in the same style and grandeur as Belgravia,’ says Mark Cherry of Minerva, joint developers with Northacre. ‘It was a high-profile wealthy area and is now going through a revival. Some people will only buy Mayfair and Knightsbridge, but others will want better lifestyle and better buildings, so they will come here. We’re offering a high-level of service for people that expect high service, with three concierges on site at all time. I spoke to somebody who was moving from a mansion block and they said they want to be in a building where the pipes don’t rattle and they don’t have to rely on a single elderly grumpy porter. People want classic British houses with American-style service.’
The surprising thing about all four properties is how similar they are. All are decorated in dark masculine colours. All have Gaggenau kitchens and Crestron systems to control sound, security and lighting. None have gardens. All have flat-screen TVs in the walls of every room. The houses have lifts – ‘Middle Eastern clients don’t like using the stairs,’ says Hannah – while the apartments encourage ‘lateral’ living. There are separate bedrooms and entrances for staff–at The Lancasters and One Hyde Park, some clients also purchase a separate apartment for staff. All have serious security, and all have space. Lots of space. The most breathtaking is One Hyde Park, the best views are from The Lancasters and Cornwall Terrace and the most charming is Ovington Square.
The properties can even be sold fully furnished. ‘The keyword is “turnkey”,’ says De Keyzer. ‘International clients are busy and want to move in straightaway with their suitcases.’ That’s not to say they’ll rush to make the purchase. ‘They’ll look at everything available,’ says Hannah. ‘They like to have choice. This isn’t a financial purchase, it’s a personal one.’
The super-prime market is very lucrative for estate agents. ‘It’s competitive, but in the £10 million-plus range Savills and Knight Frank have more than 50 % of the market between us,’ says De Keyzer. ‘That’s because we are international companies with very good contacts. Our fees are 2.5% for sole agency and 3% joint agency but it’s negotiable. We can afford low fees because our values are higher and we have a large turnover of properties. In London the average house is sold every five years, but on the continent people hold on to property for generations.’
That could be about to change. ‘Over the last few years, the lack of property has become apparent,’ says Hannah. ‘The best properties have been bought by international clients and they won’t be traded for many years. People who purchase a premier address will keep it as an asset for a while.’
Because of this, Hannah anticipates good times lie ahead. ‘London is London, arguably the centre of the world and a major financial hub,’ he says. ‘Clients need to be here, they want to be here, they understand the tax implications and they have good accountants. We’re expecting 30% growth over the next three years.’
Cherry agrees. ‘The market at this level is strengthening. Because people want certain key locations, the market can never be saturated, there are listings, conservation areas, it takes ages to get planning permissions and there are strict limits on tall buildings – it’s a very good market to be in.’ If you can afford it, obviously.