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Battersea Power Station flats snapped up

By Denise Roland

Investors have rushed in to reserve luxury homes planned for the revamped Battersea Power Station, with 600 of the 800 properties already claimed after just five days on the market.

The buyers are the first to advance on the redevelopment of south-west London’s iconic behemoth where the price tag per square foot exceeds £1,000.

Investors paid reservation fees of around £2,500 for each of the properties, which ranged from one-bedroom flats to townhouses, with river-facing penthouses commanding the highest asking price of more than £6m.

Overseas buyers will be courted in coming weeks during various international sales exhibitions, following the market launch in London last Thursday.

The wave of enthusiasm from buyers puts Battersea Power Station Development Company chief executive Rob Tincknell comfortably on his way to meeting an ambitious target to sell all 800 properties by the time construction starts in September 2013.

Strong investor interest in the historic site is believed to signal a move outside the traditional prime London housing market as supplies in prestigious neighbourhoods like Kensington and Chelsea dwindle.
“Battersea isn’t prime central London and prices are already in excess of £1,000 per square foot,” Camilla Dell, founder of broker Black Brick Property Solutions LLP, told Bloomberg.

“So investors are betting on prices reaching similar levels to prime, which is a gamble.”

The redevelopment, by a trio of Malaysian giants – SP Setia, Sime Darby and the Employee’s Provident Fund – comes after nearly three decades of dereliction for Battersea Power Station, considered a prime example of 1930s Art Deco architecture.

Construction work on the site will involve the removal and individual rebuilding of the four iconic white chimneys of the Grade-II building, to avoid their possible collapse due to corrosion.

Preparatory work on the site began in 2012, with the first properties are expected to be completed by 2016.

Wealthiest Buyers Undeterred by Taxes on London Luxury Homes

By Chris Spillane

London’s most expensive homes will outperform the rest of the U.K. residential real estate market this year as wealthy buyers shrug off property-tax increases, Knight Frank LLP said.

Prices in the super-prime market of houses and apartments costing 10 million pounds ($16 million) or more will climb as much as 5 percent this year, the London-based broker estimates. Values gained 6.9 percent last year as buyers competed for fewer properties.
“Stock in this segment is very limited,” Liam Bailey, Knight Frank’s head of residential research, said by e-mail. “The population of very wealthy potential buyers has been rising strongly over the past two years and looks set to rise into 2013.”

London’s high-end properties are attracting investors seeking assets that have appreciated during Europe’s sovereign debt crisis and the Middle East’s economic and political turmoil. While price gains are slowing for homes costing an average of 3.7 million pounds, which Knight Frank defines as luxury properties, demand for super-prime London properties hasn’t abated, Bailey said.
There were 98 deals valued at 10 million pounds or more in the nine months through September, up from 94 a year earlier and 74 in 2010, according to data compiled by the firm.

Tax Havens

Many super-prime homes are owned by shell companies set up in tax havens such as the Cayman Islands to avoid transaction levies and to remain anonymous. Chancellor of the Exchequer George Osborne’s annual budget, announced in March, targeted these companies to help trim Britain’s record deficit.

In the budget, Osborne introduced a 15 percent tax, or stamp duty, on all properties bought by overseas companies. The levy on all other homes sold for more than 2 million pounds was raised to 7 percent from 5 percent.

On top of that, homes valued at 2 million pounds or more and owned by an offshore company will be taxed as much as 140,000 pounds a year, starting in April. The government will also charge a capital-gains tax on home sales by owners who are non-resident, non-naturalized persons if the value of the deal exceeds 2 million pounds.

The initial round of tax increases in March fuelled concern among potential buyers that stricter levies would follow. Luxury-home prices in areas like Knightsbridge, Mayfair and Kensington rose at their slowest rate in more than two years in December as homebuyers delayed purchases.

‘No Shocks’

The latest measures weren’t as drastic as some super-prime buyers had expected, according to Giles Hannah, co-founder of broker VanHan, which is backed by private-equity firm Palmer Capital. Hours after the government confirmed the additional levies, a Middle Eastern investor contacted VanHan looking to spend about 70 million pounds for a mansion in central London.

“This client was taking a wait-and-see approach in case there were any shocks” in terms of new taxes, Hannah said. He declined to identify the buyer.

“The 140,000 pound levy is very quickly absorbed,” Hannah said. “The numbers are so extreme that these taxes aren’t that damaging to this sector of the market. To them it’s just another bill.”

Lucian Cook, a director of residential research at broker Savills Plc (SVS), said transactions in the super-prime range have been less affected by the changes than other parts of the luxury market.

Market’s Resilience

“At this end of the prime market, housing wealth tends to be a much smaller proportion of a buyers total wealth,” Cook said by e-mail. “This suggests that it will outperform over the next five years and should be less susceptible to a slowdown in the coming year.”
Like Knight Frank, Savills expects super-prime homes to appreciate more than less expensive luxury residences, though the broker hasn’t made a specific forecast.

Oversea buyers and a scarcity of luxury properties listed for sale is also inflating values in Manhattan. The median sales price climbed 7 percent in the fourth quarter from a year earlier to $4.4 million, Douglas Elliman Real Estate said on Jan. 3. The broker defines luxury property deals as the top 10 percent by price.

The new levies are affecting how luxury homes are bought, brokers say. Offshore companies were used in 14 percent of property transactions handled by Savills before the taxes, according to the London-based broker. Since then, about 5 percent purchases have been made using a company structure.

Credit Boost

Prior to the new taxes, about 32 percent of homes worth 10 million pounds and above were purchased by an offshore company, according to data compiled by Knight Frank. After their introduction, the rate fell to 3.8 percent.

The taxes have mostly affected those luxury properties in the range of 2 million pounds to 5 million pounds. Sales in that bracket fell 44 percent in the third quarter from a year earlier. For homes valued at 5 million pounds and up, the drop was 13 percent, according to Knight Frank. For homes valued at 2 million pounds and below, sales rose by 13 percent.

While the British economy emerged from a recession in the third quarter and the Bank of England is trying to boost the availability of credit, doubt about the recovery is curtailing property demand.

Britain’s home prices may record a modest increase this year, Acadametrics Ltd. said today. Halifax forecasts home prices will probably be little changed in 2013 and Nationwide Building Society predicts that values may fall “modestly.”

U.K. home prices will fall 2 percent this year, the second straight decline, as values in every region of the country decrease for the first time since the onset of the financial crisis in 2008, Knight Frank said in November.

Kensington, Chelsea

Home owners are reluctant to sell in areas such as Kensington, Knightsbridge and Chelsea that have traditionally been home to the city’s best properties. A dwindling supply in those central London neighbourhoods and a desire among some to live near the U.K. capital’s financial districts have spurred super-prime developers to expand east toward the City of London.

Developers are turning obsolete commercial buildings into apartments in the City of London financial district as non-prime offices on the area’s fringes become difficult to lease.

One of those is the latest luxury apartment complex to be conceived by the Christian Candy’s CPC Group, which helped mastermind One Hyde Park, the U.K.’s most expensive condominium complex. CPC in November submitted a planning application to build 165 apartments near the Tower of London for a Norman Foster-designed development called Sugar Quay.

Sugar Quay

“Given the scarcity of land available for development in prime central London, you can see how and why developers are now looking for new areas develop, such as Sugar Quay,” said Camilla Dell, managing partner at Black Brick Property Solutions LLP, which helps wealthy individuals find homes in the U.K. capital.

Dell recently advised a buyer who agreed to terms on a house on a private, gated road in London’s Kensington neighborhood for 10.75 million pounds. The buyer, who she declined to identify, was seeking a house in London because his children are being educated in U.K.

London’s luxury home prices are 16 percent higher than their 2008 peak and have risen 53 percent since a post-credit crisis low in March 2009, according to Knight Frank.

Kensington Palace Gardens

The British pound has depreciated about 13 percent against a basket of currencies in the last five years, a Bank of England index shows. That makes London properties less expensive for some foreign buyers.

The Middle Eastern buyer that VanHan is acting for is seeking to buy a 30,000 square-foot (2,800 square-meter) residence in Holland Park or Kensington Palace Gardens, one of the world’s most expensive streets, Hannah said.

“For these super-prime buyers, it’s about having a solid, secure asset in a gated street with security at each end,” Hannah said.

Why Are So Many Chinese HNWs Moving To The UK?

by Chloe Barrow – Thursday, 3rd January 2013

Occidentally on Purpose

The UK is experiencing a sharp increase in the number of HNWs making the move from Eastern countries, particularly China. Chloe Barrow finds out why AS UNATTRACTIVE AS living in the UK may be — the faltering economy, the unpredictable weather, sky-high living costs and seemingly hefty income tax — there is no denying its global popularity as a homemaking destination.

The process of acquiring a British passport, getting on the UK property ladder and settling into life in Britain is usually less complex for the world’s financial elite than for their less wealthy counterparts, as one might expect. However, as is true for everyone regardless of wealth, there are always challenges to be faced when entering a new land.

The majority of visa applicants seek access through family ties, study or work opportunities. However, there is a small selection of individuals who walk through border control without the need for any of these fussy credentials. And how do they prove their eligibility for British citizenship? A spare million in the bank will suffice to secure a position for global high-rollers who have no shortage of cash but wish to experience the benefits of being a UK resident or citizen.‘There are a number of categories through which you can obtain a UK passport via financial means, starting from setting up a business in the country with a minimum of £200,000 right up to a £10 million standalone investment,’ says Asha Thomas, co-director of specialist law firm Global Immigration Solutions. For obvious reasons, the UK specifically welcomes visa applications from those with substantial financial capital, and the tier 1 (investor) visa is aimed at HNWs who are able to invest £1-10 million in the UK’s economy. This route is a popular option for the affluent Chinese. ‘Out of all the investment tier 1 visa applications in the last year, 28 per cent were Chinese and 24 per cent were Russian,’ says Kamal Rahman, head of immigration at law firm Mishcon de Reya. One reason for this high proportion of Chinese tier 1 immigration, Rahman adds, is that it is a much needed ‘plan B’ option for affluent individuals from countries such as China.

‘The UK has always been an attractive destination for those seeking tax efficiency, a cosmopolitan lifestyle and excellent educational opportunities. This is particularly true for Chinese and Russian applicants since they are governed by modern communist regimes which could in theory reclaim assets from their citizens.’

According to Rahman, the reason so many Chinese choose to school their children in the UK is not simply down to the fact that they admire Britain’s educational establishments and facilities, but also to give their young ones the opportunity of settling in the country. ‘While there is no English language requirement for tier 1 applicants like with other general UK visa applications, the ability to speak fluent English is obviously crucial if you are to thrive in the UK,’ he says. Illustration by Vince Fraser (vincefraser.com) WHEN IT COMES to the Chinese, the level of wealth often does not equate at all to the amount of English spoken. This language barrier, says Gary Hersham, director of luxury property specialist Beauchamp Estate, is one of the biggest challenges for Chinese people looking to set up home in the UK.

‘Many affluent Chinese who come to us looking to buy a property haven’t had much of an education, so sometimes the language is an issue. I have received some enquiries for properties written entirely in Mandarin,’ he says. ‘However, these people are clearly good a what they do and have managed to amass a substantial amount of money over the years.’

‘Amass’ is the operative word here, since, unlike the loan-loving Brits, emigrants from the East almost always buy in credit. ‘T he Chinese are not borrowers. On average they’ll spend £3-5 million in cash on a home when they come to us,’ adds Hersham. Also, unlike wealthy British citizens who tend to opt for older, more lived-in properties, the Chinese prefer investing in new developments. ‘Clients from this part of the world usually buy modern properties in central London with plenty of amenities,’ says Hersham. Camilla Dell, managing partner of leading property search and acquisition consultancy Black Brick Property Solutions, whose client base is now 30 per cent Asian, agrees: ‘Asian buyers like to buy “offplan” [before construction has commenced] or new-build properties, as this is what they are familiar with in their own local markets.’ However, not all Asian buyers stick to properties in central London, as Dell reveals, instead exercising their affinity with more Eastern territories within the city. ‘Areas such as Canary Wharf have become extremely popular with Chinese buyers who want to invest in off-plan developments. However, we always advise buyers to be wary of such purchases, which can be located in secondary areas and tend not to perform as well as prime central London properties.’ Another issue facing Far East buyers is the risk of purchasing properties from afar, as demonstrated by the recent case of Hong Kong businessman Mr He, who paid a £35,000 deposit on a fourbedroom apartment in the UK which he believed was a 40-minute walk from central London. In fact it was a 40-minute journey by highspeed train and the £350,000 home was in Lincolnshire, 120 miles away. It is believed that details of the exact location were conveniently omitted, rather than being inaccurate. According to Dell, the Asian wealthy tend to buy residential rather than commercial property in the UK. However, when they do invest in commercial property, the Chinese philosophy seems to be all about safety in numbers. ‘The Chinese often purchase little shops or units with a freehold for the family to run. They then buy more and more until eventually they own the entire street,’ says Hersham, who adds that areas of north-west London such as Brent Cross and Finchley are popular commercial property hubs for the Far East community. However, whether residential or commercial, the Chinese are not entirely motivated by material matters when it comes to buying property. ‘A number of our Chinese and other Asian clients are very superstitious when choosing a home — they often come with a Feng Shui guide on their iPads to ensure the property has positive energy,’ says Hersham. This superstitious approach doesn’t stop at Feng Shui, as Dell points out. ‘Chinese and other Asian buyers will be very particular about house and flat numbers, with the number four being extremely unlucky,’ she says. AS MANY OF these acquisitions are intended for their children to use while studying in the UK, there is perhaps a greater incentive to choose wisely. What’s more, there is a trend emerging for affluent Chinese to combine the benefits of a British education with the value of a tier 1 visa application. ‘Chinese parents are increasingly gifting their children with a million pounds so that when they finish their studies it then takes less time for them to gain residency,’ says Rahman. However, while setting up home in the UK is largely a practical and economical decision for Far East folk, buying a property in London is an aspirational purchase in itself, with or without UK residency. ‘For many, owning a property in London is as much about showing status and having a trophy asset as it is about making a good investment,’ explains Dell.
Serious ‘statement’ purchases are made largely by buyers from Hong Kong rather than the mainland, according to Hersham, who recently sold a £30 million property in the Belgravia area to a Hong Kong client. ‘Until recently, the new wealthy Chinese were only wealthy on paper. Now that they are able to sell shares in their businesses, we will start seeing more and more of these top-end UK property purchases, particularly with an upcoming IPO which is allowing even more cash to be released in the country.’

Banks Help as Asians Shop for Foreign Property

By Sonia Kolesnikov-Jessop

As more wealthy Asians seek to buy property overseas as an investment or short-term residence, their private bankers are only too happy to help. The wealth management divisions of banks are reporting a brisk business in setting up short-term revolving loans for property purchases. The term is usually five years, renewable annually after that, and the interest rate is set individually in accordance with the borrower’s credit profile.

“Many wealthy people may want to maintain their liquidity rather than just applying it to the real estate assets, as liquidity allows them to take advantage of investment or business opportunities that may arise,” said Michelle Tan, head of real estate product management at Bank of Singapore.

Given the low interest rates in the region, it makes sense for clients to borrow against property and use the cash for investments to generate higher returns, said Yves-Alain Sommerhalder, head of ultrahigh-net-worth solutions at Credit Suisse’s private banking operations in the Asia-Pacific region.

Another goal is to take advantage of low interest rates on loans, and to borrow in Asian currencies that have appreciated smartly in recent years against Western ones like the U.S. dollar and the British pound.

The currency play is important, since about 57 percent of wealthy investors named London as their top target market for property purchases, according to a survey published this year by the real estate agency Cluttons and the consulting firm VPC Asia Pacific.

Investors surveyed in Kuala Lumpur and Singapore identified the central London residential market as their primary target for offshore investments, while wealthy investors in Bangkok ranked London behind Yangon, Myanmar, and wealthy Indonesians placed London in third position, after Singapore and Australia.

Bryan Henning, head of global research and investments for Asia at the wealth and investment management division of Barclays, said the private bank had seen strong demand for loans for the purchase of homes in London over the past two to three years, fueled by the weakness in the property market since the last global financial crisis. He noted that while the property market in London had been strengthening of late, demand remained high among investors because of the returns they could realize from renting their properties, with the additional potential for capital appreciation over time. “In today’s low interest rate environment, many Asian-based investors still see U.K. property as a good investment opportunity,” Mr. Henning said. “This demand has been further supported where the home currencies of some of our client base has appreciated against sterling, such as in Singapore, where the Singapore dollar has appreciated by 20 percent over the past three years,” he said.

The bank has also seen increased interest in investment in properties in Australia and New York, “where clients are often interested in potential returns and also in purchasing homes for use by their children who may be looking at attending university overseas, or even as potential retirement locations.”

The top destinations in the world for international students are also attracting demand for both residential and commercial properties.

In a recent report, the real estate consultants Jones Lang LaSalle identified a growing breed of wealthy property investors whose purchasing decisions had been driven by familial and educational ties.
“Asian buyers like to educate their children in the U.K. and will often buy a property rather than rent,” said Camilla Dell, managing partner of Black Brick Property Solutions, an independent buying agency in London. Her Asian client base has quadrupled in the past two years alone and now represents about 20 percent of the total, she said.

The properties she has helped clients buy were priced at over £1 million, or $1.6 million, on average and were in central London. These buyers, she added, are typically looking for two-bedroom apartments close to universities and tend to prefer newly built, modern buildings with onsite concierges. “Property is viewed as a safe haven, and the weakness in sterling against Asian currencies is also a key driver,” Ms. Dell said.
Martin Bikhit, managing director of Kay & Co., a real estate agent specializing in London’s West End, has also witnessed an increase in Asian buyers. “Our inquiry levels have probably doubled over the past two years and we have sold apartments to no less than 15 buyers in the past 12 months,” he said.

Mr. Henning of Barclays said the bank’s clients were buying both residential and commercial properties in London, and mainly residential properties in New York and Australia. He added that while some clients might be buying for either their personal use or for their children, most of them were “seizing the opportunity to buy mainly for investment purposes.”

Mr. Sommerhalder concurred. “Most believe that there is a limited supply of good quality properties in the prime locations and this will continue to drive up valuations,” he said.

But while wealthy investors may be interested in property as a pure investment, they are not speculating — at least not with their bank’s money. Wealth managers emphasized that the banks were writing loans only for the purchase of completed properties, as the risks inherent to providing loans to properties not yet completed were deemed too high to underwrite in most cases.

Private banks tend to stick to lending against completed properties in areas where there is a track record on rental income, said Mr. Henning, of Barclays.

While term loans get fully disbursed on one date and interest accrues immediately, revolving loans are more flexible — and less binding than a classic mortgage agreement, said Ms. Tan, at Bank of Singapore. “The client may use a revolving loan as a standby facility which will only be used when investment opportunities are found,” she explained. “So if there are no investment opportunities, the line stays undrawn and will not incur interest charges.”

When the super-rich want to buy a home, they don’t use the same real estate agents as the rest of us

The Secret Agents

Anna Tyzack talks to the people tasked with finding and buying the finest properties.

Since the economic crisis, the famed and fortuned- or some of them, at least- have recoiled from the ostentatious displays of wealth synonymous with the property bubble that lasted until 2007. This is not to say, however that they often employ a professional property finder to carry out the transaction discreetly on their behalf.

Sometimes known as “secret agents”, these men and women are some of the most powerful individuals in the prime housing market. They have market insight, exclusive access to the most coveted properties, and the expertise to broker sensitive, highly secretive deals. “A large part of my job is to ascertain through my contacts which precious residences might possibly come up for sale,” says Paul Belcher, director of Ultissimo, who finds homes for the rich and famous around Italy’s Lake Como, where demand for homes with views of the lake far exceeds the number of properties for sale. “Just occasionally a gem of a house comes up for sale privately at what is considered to be a reasonable price in Como terms, and I warn my client that it’s an opportunity not to be missed.”

Acquisitions agent Banda property estimates that about 75percent of properties over US$15million are now sold “off market” via a buying agent. “It works well for both sides. Vendors want to keep their business out of the spotlight, and can be sure that a buying agent will expose their homes only to committed, high -calibre purchasers,” says Roarie Scarisbrick, a buying agent for Property Vision. Woe betide a buying agent who talks to the press: when one let slip that David Beckham was investing in a property in an apartment on Paris’s left bank, he lost all his credibility- and his clients. “There is a saying in France: ‘vivons heureux, vivons cachés’, which means ‘live happily, hidden away’, says buying agent Alexis Fredet, co-founder of property finder Margaux et Louis, which specialises in finding homes in France for buyers from Hong Kong and mainland China. “A buying agent’s job is to make sure this happens.”

Naturally, then, buying agents won’t discuss their clients or the iconic properties that they obtain on their behalf. When high profile sales find their way into the international press, it’s usually because the buyer is happy for details of the purchase to be in the public domain, or via a leak. This summer, for example, the news broke that Domaine de Valfere, the late American arms dealer Jeffrey Steiner’s former estate, was sold to a Russian buyer, while Irish businessman Derek Quinlan’s Villa La Carriere on the French Riviera’s Cap Ferrat was bought by a buyer from Kazakhstan for just over €65 million (US$80 million). Meanwhile it’s common knowledge in Switzerland that the owner of watch manufacturer Patek Philippe has bought a modern CHF40 million (US$41 million) mansion close to the lake. Edo Mapelli Mozzi, managing director of acquisitions agent Banda Property, estimates that for every high-level sale that reaches the press, at least five more go through unnoticed thanks to a secret agent.

Buying agents are more in demand now that the market has swung in favour of buyers rather than sellers, according to Emanuel LaRoche, one of Geneva’s top property finders. “Geneva is a safe haven with an excellent climate and low mortgage rates- currently from 1.5 per cent- but as a buyer it’s crucial not to overpay,” he says. LaRoche aims to make sure all his clients pay at least 20 per cent less than they would have done in 2008.

In the South of France, where the property market is “very difficult” this summer, Nigel Hindle, co-founder of property specialist Hindle Baldock, steers his clients away from paying over the odds. “There are so many uncertainties surrounding the euro at the moment but France is still a good bet as 25-year fixed mortgage rates are typically as low as 4.2 per cent, “he says. “Unfortunately there is not much on the market and many of the homes that are for sale have artificially high asking prices. I find my clients motivated sellers who are ready to do a deal.”

Of course hiring a buying agent isn’t cheap – usually about 2 to 2.5 per cent of the purchase price, plus an additional premium to secure a property before it has been offered on the open market. But according to Mapelli Mozzi the premiums are worth paying for privacy and professionalism, and to secure the property before it comes to a sealed bids scenario, where prices can escalate much further.

Bidding wars are becoming increasingly common in London this summer. Just recently a house in Mayfair received more than 15 sealed bids in two weeks and sold more than £1 million (US$1.56 million) above the asking price. “There are so many unknowns when you’re buying a property off-plan or unfinished, and very often buyers are hugely disappointed with the end result, “says Scarisbrook, who acquires homes priced from £60 million to £90 million (US$94 million to US$156 million) on behalf of buyers from Hong Kong and China. “I go to the site on behalf of my client; I assess whether it is a quality build and a good investment. And if it is, I make sure they buy the best unit in the best building.”

With a home being such a personal acquisition, it can be hard for wealthy investors to be confident that their buying agent will make the right choice for them. According to Tom Hudson, co-founder of UK buying agent Middleton Advisors, a property finder’s role is to remove the emotional element from the transaction and focus solely on value for money. “We understand the intricate price variations of the area you are investing in, we know about the schools and the transport links, and will advise you what level to offer at,” he says. When a buyer misses out on a property, it will almost always mean they have avoided overpaying or purchasing a home that is compromised, he adds. Camilla Dell, managing director of Black Brick property finders in London, likens the role of a buying agent to that of a stockbroker or art dealer. “The rich and famous automatically turn to experts when it comes to almost every investment decision,” she says. “For those investing in property, the instruction of a good buying agent has become an equally essential requirement.”

Resist the herd instinct and focus on small developments

The best things come in small packages

By Faith Glasgow

As irresistable as the glossy brochures of large scale housing schemes may be, many home hunters might find a better deal if they focus on smaller, less high-profile developments. One attraction of these more humble projects is their “specialness” offering the chance to buy a “one off” flat, rather than clone of the other 199 apart-ments in the block. Says Peter Rollings, chief executive of estate agent Marsh & Parsons: “Often, smaller developments are effectively conversions, and this mix of traditional and contemporary archi-tecture piques buyers’ interest.” Rollings points to the ongoing nine-unit conversion of a former mill house in Millers Way, Brook Green, west London, where three properties are already under offer. “We expect all will go before a show home is finished, let alone the whole development,” he says. Of course, there are some respects in which grand scale wins out on the life-style front. A strength of many larger developments is that they are able to offer hotel type amenities, such as a residents’ gym, pool or concierge service, which wouldn’t be viable in a smaller scale scheme. “On the flip side, it means that service charges for smaller developments are usually much lower,” Rollings adds.

When it comes to rental investment potential, small scale schemes have some important advantages over major developments. First, they tend to be bought predominantly by owner occupiers rather than landlords. “I’d estimate that the proportion of homeowners in smaller, lower density developments in prime locations is around 70 per cent, compared with high density new build developments where more than 70 per cent of buyers will be investors,” says Camilla Dell, managing partner of buying agency Black Brick Property Solutions. This is because homeowners expect to “fall in love” with a property, including its idiosyncrasies and eccentricities in addition to its well-thought-out design, views and sense of community and they will pick and choose to find the right place. In contrast, says Dell, large-scale developments are marketed as a matter of course to speculative investment buyers in Asia, who buy off-plan and want only to trade or rent out their units, not to live in them. The flats in these schemes tend to be smaller, cheaper, relatively standardised units to appeal to that market.

Served rare there is greater “rarity value” for each unit in a small development, and a much lower risk of several landlords putting their apartments on to the rental market at any one time. “Units in big schemes can usually only compete on price,” says Naomi Heaton, managing director of central London property investment firm LCP. “We occasionally take on rental properties in areas such as Canary Wharf for clients, but we have to discount the rental by about 25-30 per cent [over wider market values].” Moreover, observes Martin Bikhit, managing director of estate agent Kay & Co, timing can be a problem. When a lot of units in a scheme are sold to buy-to-let investors, a rush of similar units typically comes to the rental market at the same time on completion of the development. “This is not an issue in a buoyant market, but in a quieter market a glut of pretty much identical apartments can result in downward pressure on rental prices,” he says.

Heaton also warns that where absentee landlords and itinerant tenants predominate, the building and surroundings may not be so well looked after. “Homeowners tend to set up active residents’ committees to make sure everything is as they want it to be,” she says. Smaller developments, especially those in good locations, also tend to hold their capital value better because of the scarcity factor. Says Marsh & Parsons’ Rollings: “When it comes to reselling, because there’s a small number of properties in the development, few are likely to be marketed simultaneously. That lack of supply strengthens the vendor’s position.” The sheer volume of similar units in a large scale development can dampen resale prices particularly given that such schemes are often part of the wider long term regeneration of a whole district of the capital. Kay & Co’s Bikhit fears that may be a problem when the Olympic Village is turned into a 2,800-unit mixed community of affordable and privately owned housing after the Games.

Investment in Central London property market emerging as the safest bet

Forget bunds, gilts or gold. London prime central residential property is emerging as the safest of all safe havens. If you want to know where those in the know put their personal savings, just talk to a real estate agent in London.

First it was the Greeks, then the Italians, and now, it seems the election of socialist president Francoise Hollande has sent super rich French scurrying to the safety of Belgravia and Mayfair. Almost all say agents say they’re seeing a rush of French buyers these days, wary about Hollande’s anti-rich policies. Not to mention Indians.

Interest from Indian buyers has jumped in direct inverse correlation to the drop in business confidence. Says Camilla Dell, of buying agents Black Brick, which works with high net worth Indians looking to invest in London property: “There’s a sharp increase in wealthy Indians choosing to go offshore and become NRIs. We’ve had a surge of enquiries in the past few weeks since the credit rating downgrade.”

London prime central residential property doesn’t follow the rules of the rest of the UK, or even the rest of London. According to a study by independent analysts Fathom Consulting, The average price of homes across these areas is £1.2m – almost six times the national average.

In the four years from late 2007, their value rose 30% faster than the London market and 34% faster than the UK market. “If there was a Mayfair index, it would be a bellwether for performance global asset classes for wealthy investors around the world,” says Gita Nayyar, a veteran from wealth management industry, now based in Mumbai.

According to a report by the Institute of Public Policy and Research, overseas buyers pumped GBP5.2bn into London property in 2011, £1.5bn more than in 2010. A study by Clarendon Capital, a new fund that hopes to cash in on the prime London boom, London prime central has consistently outperformed both gold and the FTSE over a period of 15 years.

“It’s seen as safe, and for investors who are looking to transfer their capital from risky markets into a viable asset, buying prime central residential property is an ideal option,” says Sayu Sinha, fund manager at Clarendon. A study by Clarendon House Capital shows that prime central London property prices have outperformed the FTSE by 164% , and Gold prices by 16% over the period January1995 to April 2012″.

The area around Belgravia, Mayfair, South Kensington, the heart of what’s called prime central, with an arm stretching out to St Johns Wood, Chelsea and Regents Park, is more or less in the prime central region.

It’s always been popular with Russians and Middle Eastern buyers, and in the last 18 months or so, with buyers from troubled Europe – Italians and Greeks — seeking to transfer their wealth to safer shores. Despite a hiccup – or three – with the UK’s last budget imposing a punitive 15% stamp duty on properties over GBP 2 million, business is back to usual in this rather unusual property market.

The Telegraph’s 25 most influential people in British property?

The Property Power List

You can’t measure influence like you can cash in the bank. But the 25 entries on our list represent a cross-section of the most important people working in the selling and buying of British homes. It includes those who work in the property field day-to-day, as well as those who exert their power from the fringes. Some are royal, some are wealthy, some are titled and many most definitely are not. All of them play a crucial role in how and where we live, as well as how much we pay. With the property market set for another turbulent year, their position in British society is as central as ever.

1. Sir Terence Conran
Designer, restaurateur, 80
In those dark, long-away days, a home was a place that merely accommodated you, rather than impressed other people. Then Conran brought the world Habitat, providing stylish sofas and chicken bricks for whole generations of first-time flat-buyers in the Sixties, Seventies and Eighties. As those young people became more well-heeled, he supplied them with up market furniture (Conran Stores) as well as places to eat (Bibendum and Quaglino’s). British homes today just wouldn’t look the same without him.

2. Lord Rogers
Architect, 78
Richard Rogers’s Pompidou Centre in Paris was the first high-profile structure to wear its innards on the outside. Pipes, flues and ducts became design features, rather than ugly embarrassments. While not exactly transforming the face of Britain’s suburban streets, Rogers’s philosophy made a huge impression on designers both interior and exterior, still in evidence today. Its latest manifestation is Neo Bankside, the four block apartment development overlooking the Tate Modern, where stainless steel, screwdriver-like supports on the outside make way for fewer supporting walls (and thus more space) on the inside. Now 35 years old, the Rogers practice is today called RSH, to include fellow-directors Graham Stirk and Ivan Harbour.

3. Prince Charles
Heir to the throne, 63
When the Prince of Wales built his dream village of Poundbury, just outside Dorchester, he was mocked by some architectural and social commentators. They looked down on the idea of a newly built, “instant” community. In his defense, the Prince said he wanted to “create urban areas that encourage a sense of community and pride of place, and which will foster the wellbeing of those who live there.” While some people still retain a snooty attitude towards the concept, increasing numbers of developers now seek not to plonk new homes in the middle of nowhere, but to provide schools, shops and sports facilities to go with them. For instance, Kings Hill (near West Malling in Kent) was a disused airfield. Now it is a thriving community. As for influence, just look at the size of spanner the Prince put into the works when he didn’t like the proposed new development at Chelsea Barracks.

4. Phil Spencer
Home finder, television presenter, 42
Unlike a lot of television presenters, Phil Spencer has actually worked in the property field. He set up his house-search firm Garrington Home Finders in 1996, when Location, Location, Location was just a phrase, rather than a television programme. Since then, there have been 16 series of the show, plus numerous spin-offs. While onscreen partner Kirstie Allsopp plays the more intuitive, foot-in-the-door role, Phil embodies the facts-and figures approach. As per his books Adding Value to Your Home and How to Buy Your First Home.

5. Kevin McCloud
Designer and apostle of self-build, 53
Kevin has almost single-handedly transformed what could have been dismissed as a minor, crackpot hobby (building your own home) into a thriving industry. His television show Grand Designs has run to seven series, spawning Grand Designs Live exhibitions up and down the country. His latest book is called 43 Principles of Home, and his design firm is called Happiness Architecture Beauty (HAB). In the same way that the Grand Designs building projects stay just the right side of madness, so McCloud manages to stay just the right side of pretentiousness.

6. Kirstie Allsopp
Television presenter, writer, 40
Never was a human being more suited to house hunting than Kirstie, a woman blessed at birth by the no-nonsense fairy. Like Phil Spencer, she started up a home search agency (Notting Hill). She established a reputation for tenacity and toughness, matched only by nosiness and an insatiable interest in other people’s homes. Pre-Kirstie, the traditional UK house-hunting mindset was all about you versus the vendors, but she has shown what can be gained by adopting the hitherto unthinkable approach of being (shock, horror) nice to estate agents. Then wheedling out information with gifts of fresh latte.

7. Duke of Westminster
Landowner, 60
In the great Monopoly game of life, the player who’s been dealt the best cards is Gerald Grosvenor. He owns not just Mayfair and Park Lane, but substantial amounts of Belgravia, too. The most recent annual report for the Grosvenor Group shows that it made pre-tax profits of £394.8million, and had property assets worth £5.46billion. All from 300 acres of land which came into the family around 1677, and was mainly swamp. Far from being known as the cruel-hearted squire, though, the Duke has a reputation for taking an interest in the community, not just the cash. When Waitrose got permission to open a branch in Knightsbridge, they were forbidden to sell newspapers and greetings cards. This was in case it affected the newsagent’s business just up the road.

8. Simon Thurley
Chief executive, English Heritage, 46
With the Government making noises about how local planning authorities should have a “presumption in favour of sustainable development”, Thurley is cast in the role of the white knight defending the countryside. In all, there are 374,081 listed buildings in England, most belonging to ordinary home-owners. While many of them complain about the pettifogging excesses of the heritage “police”, few argue that protection of the past is not important. What’s more, Thurley is a paid-up historic home dweller himself. He lives in a medieval merchant’s house in King’s Lynn, Norfolk.

9. Chancellor of the Exchequer
Currently George Osborne, 40
At a stroke, the puller of the purse strings can make the property market dance to his tune. With one hand, he can dish out a stamp duty vacation, with the other he can launch a stamp duty vendetta against those trying to get out of paying that particular tax. The biggest task facing him at the moment, of course, is how to get young people onto the property ladder. First it was First Buy, now it’s New Buy – but could we soon be saying goodbye to Britain as a nation of home owners

10. Lucian Cook
Director of residential search, Savills estate agents, 40
Lucian became a land agent after doing a land economy degree at Cambridge. As well as being principal author of the firm’s quarterly market review Focus, he has established a beyond-in-house reputation. He came up with a paper for the Centre for Policy Studies, entitled Taxing Mansions, in which he wrote: “Recent proposals for a ‘mansion tax’ claim that it would be a precisely targeted and efficient tax that would be paid only by the very wealthy. And that high-value residential property makes an unfairly modest contribution to tax receipts. These claims are flawed.” Guess what? The mansion tax idea was dropped in the Budget, in favour of a stamp duty rise on properties above £2million.

11. Liam Bailey and Grainne Gilmore
Property analysts, Knight Frank estate agents, 40 and 36
Twin fonts of wisdom and statistics at up market estate agents Knight Frank. She’s an economics journalist who produces report on London property, particularly on builder and buyer attitudes. He’s head of residential research, and as well as pronouncing on current market conditions, carries out bespoke research projects on behalf of developers, investors and funders. Both are tangible evidence that the top-end estate agent these days needs more than pinstriped suits and swanky offices in Belgravia.

12. Nick and Christian Candy
Interior designers and development managers, 38 and 37
Of the two somewhat publicity shy siblings, the more visible is Nick, who did human geography at Reading, then worked for KPMG and J Walter Thompson. They started out in the Nineties, buying an Earl’s Court flat with £6,000 from their grandmother, doing it up and then selling it for a £50,000 profit. Now Candy and Candy have gone global (Russia, Qatar, Dubai, Nigeria), and clients include Kylie Minogue, Lakshmi Mittal and Gwyneth Paltrow. A Monaco penthouse they redesigned sold for a reported £200million. Their greatest London hits include 21 Chesham Place, a former telephone exchange in Belgravia (apartments £10million-plus), and One Hyde Park (current asking price £18.5million for a three bedroom apartment).

13. Lord Linley
Furniture and interior designer, 51
Another member of the Royal family who has helped reshape the face of up market UK property, having pioneered the idea of the show-home plus. Instead of hiring random furniture to deck out new build properties, top-of-the-range developers now commission the noble Lord to do a full fit-out. Buyers get the whole set-up, full of Linley-designed pieces. Purchasers are prepared to pay well over the sum-of-the-parts for swanky apartments as well as a dusting of royal design magic, as at big new developments The Lancasters (Bayswater) and The Lakes by Yoo (Cotswolds). With home-design clients now including Oprah Winfrey and perfumer Jo Malone, this has proved a fruitful domestic diversification for Linley from designing hotel rooms and yacht interiors.

14. Tony Pidgley
Chairman, Berkeley Homes, 64
Pidgley is proof that you don’t have to be a public-school-educated smoothie to make it in the property world. A Barnardo’s boy, he was adopted at the age of four by a family of travelers, and raised in a disused railway carriage. He left school at 15, set up a haulage business, became a millionaire five years later, and started Berkeley Homes in 1976. One of the first people to start building non-box-like homes, in response to the bad reputation of new-build housing estates.

15. Paul Shamplina
Founder, Landlord Action, 40
Positioned very much at the sharp end of land lording, Paul Shamplina is the kind of person you want on your side. As well as operating a telephone advice service for owners who’ve got out of their depth, the feisty Mr S operates as a pro-landlord political campaigner and as a very practically minded effecter of evictions. He wants squatting to be made illegal and had carried out 15,000-plus evictions at the last count.

16. Mark Clare
Chief executive, Barratt Developers, 54
Clare took over at Barratt in 2006, after 12 years with British Gas and Centrica. He arrived just in time for the economic crash, resulting in lay-offs throughout the firm, as high levels of debt had to be reduced. Clare has since rescued the company from immediate danger, adopting a policy of quietly buying up land (£1.3billion worth reportedly acquired since May 2009), and building fewer houses (11,000 last year, as against 22,000 pre-crash). At the same time, he improved financial returns (operating profits rose 40 per cent in the last quarter of 2011). Standards remain high, though, as Barratt is the only major developer to have held a Home Builders Federation five-star award for three years running.

17. Ed Mead
Television and radio front man, director, Douglas and Gordon estate agents, 52
Outgoing, motorbike-riding spokesperson-cum-newspaper and magazine contributor, distinctly unconventional. Typical of his all action style is the way he famously once helped Telegraph Property get a scoop by climbing through the first floor Window of a Chelsea mansion. It had been occupied by a squatter who was posing as the owner and accepting payments from would be tenants.

18. Stuart Law
Chief executive, Assetz, 48
Blogger, house-price analyst and founder of Assetz, a private investor organisation which voices the concerns and promotes the interests of 40,000 buy-to-let and would-be buy-to-let investors in the UK. And that figure looks like it’s going to increase over the coming months, as first-time buyers find it hard to get on to the property ladder and are increasingly forced to rent. Not so long ago, buy-to-let was seen as a busted flush; now, it’s landlords who hold all the cards. Especially in London, here average rents are £1,212 a month, compared to the national average of £716.

19. Bob Weston
Founder and chairman of developers Weston Homes, 56
He began the business in a spare room and, 25 years later, has turned it into a company with a £100million-a-year turnover. His developments are concentrated around the edge of the capital and the Home Counties. These new builds are aimed strictly at low-to middle- income earners, with prices ranging from £150,000 to £700,000. Despite being a former conservative parish councilor, he says government policies are preventing the building of affordable housing. An Essex man, the home ground of his local football club, Colchester United, bears his name: the Weston Homes Community Stadium.

20. Alex Michelin and Andrew Dunn
Founders of top-end design and development firm Finchatton, 35 and 36
Their story is not dissimilar to that of the Candy brothers (see entry 12), only Michelin and Dunn were school friends Charterhouse) rather than brothers when they set up their firm 10 years ago. Typically, their first project was in up market Mayfair, and sold for twice what they paid for it. Since then, they’ve gone international, but always in the plusher parts of the globe (Cap Ferrat, Caribbean), and for super-rich clients (e.g. Simon Cowell). They’ve done £840million worth of developments so far, and have £300million worth up-and coming. Projects include a £25million triplex apartment in Chelsea, and a small apartment block (The Lansbury) next door to Harrods.

21. Charlie Ellingworth
Founder, Property Vision, house search agents, 55
It was nearly 30 years ago that Charlie Ellingworth set up Property Vision in order to help cash-heavy but time-light house buyers find a place that matched their dreams and price range. Detachment from the actual business of selling helps Ellingworth retain a more objective view of the property market, as expressed in his entertaining blog musings. So whereas most estate agents are too busy selling to ask any wider questions, Ellingworth dares to question whether it is a good thing that large numbers of high-end homes in central London are being bought by overseas buyers who may only live there for a few weeks per year.

22. Melanie Bien
Mortgage and personal finance expert, 38
Melanie worked for mortgage advisers (Savills) Private Finance, before recently setting up her solo consultancy venture Bien Media. As well as being at home with high finance, she is adept at communicating money matters to the less fiscally clued-up, as demonstrated by the titles of her books – Renting Out Your Property For Dummies and Buying and Selling a Home for Dummies. Famously irked by a Kirstie Allsopp tweet about the shortness of her black dress when appearing on BBC Breakfast. This was gleefully picked up by the tabloids, and presented as a blonde versus brunette spat.

23. Klas Nilsson
Chief executive, Northacre developers, 70
Brought up in Sweden and trained as an architect, Nilsson moved to London in the Seventies. From the beginning, he made a specialty of building new, modern interiors behind original facades. Look at the names of the projects (The Bromptons, The Phillimores, The Lancasters), and you will see they are mostly in up market areas, a short Chihuahua’s walk from Kensington High Street. The secret of Northacre’s success is that rather than just being a firm of builders, it is a three-headed creature, comprising development management (Northacre), interior design (Intarya) and architecture (Nilsson Architects).

24. Camilla Dell
Managing director of Black Brick Property Solutions buying agency, 34
When tough-talking Camilla Dell offers you a property “solution”, she means “bargain”. In the five years since she set up Black Brick, she reckons she has helped buyers from all over the world acquire £300million worth of London property. She gets an average of 10.5 per cent off the asking price each time. She reckons a quarter of those deals have taken place off-market, by putting private sellers in touch with private buyers without the property ever being officially launched on to the market.

25. Lord Foster
Architect, 76
Well into his seventies, over a four decade career Norman Foster has designed a staggering number of the world’s most recognizable structures. From Wembley Stadium with its distinctive arch to 30 St Mary Axe (the “Gherkin” to most) in the City. His style has mellowed slightly over the years: the high-tech, machine-influenced HSBC Main Building in Hong Kong, from 1986, is a world away from the smooth contours of City Hall, by Tower Bridge. But he shows little sign of slowing down. As well as a £50bn proposal for a new airport on the Thames estuary, Foster & Partners is behind the futuristic, circular new Apple headquarters.

London Luxury-Home Prices Gain as Foreigners Seek Reduced Risk

Luxury-home prices in central London rose the most in 10months as overseas buyers seeking the safety o f one of the world’s most resilient property markets propelled demand, Knight Frank LLP said in a report today. Values of houses and apartments costing an average of 3.7 million pounds ($5.9 million) gained 1.1 percent in March from a month earlier, the London-based broker said. Prices have been rising for three years and are 10.1 percent above the previous peak in March 2008, before the global financial crisis, said Liam Bailey, Knight Frank’s head of residential research.

“Pressure on price growth and new demand is coming from overseas,” Bailey said by telephone. “People are in danger of underestimating the amount of foreign interest in London as a property market. That’s what keeps things moving.”

Investors from overseas are buying central London homes to preserve wealth amid political and economic tensions in their home markets. Prices for the best London homes have continued to rise despite the U.K. coalition government’s plan to curb tax avoidance on luxury-home sales and calls for a mansion tax.

London luxury-home values rose 11.3 percent in the year through March 20, the smallest 12-month gain since August, according to Knight Frank. The affluent Kensington and Chelsea districts helped to push the asking price of a London home to a record this month as average values broke through the 2 million- pound level for the first time, Rightmove Plc said this week.

Home prices in Britain overall rose 0.1 percent in February, the U.K. Land Registry said March 19.

Mansion Tax

Chancellor of the Exchequer George Osborne will attack tax avoidance on property transactions to day in his budget, which he says aims to help low-income workers. Osborne is trying to win the backing of his coalition partners, the Liberal Democrats, who are seeking a tax on expensive homes.

Osborne probably will seek to curb the practice of avoiding stamp-duty payments by using offshore
companies to buy a home, said Yolande Barnes, residential research director at Savills Plc.

Stamp duty is a residential real estate transaction tax of as much as 5 percent of the price of homes worth more than 1 million pounds. Closing some loopholes is unlikely to curb demand, according to Black Brick Property Solutions LLP.

“This practice remains rare and any potential stamp duty saving is normally seen as a bonus, rather than a driver of price,” Camilla Dell, managing partner at Black Brick, said in a separate report.

Equity Rich business secretary Vince Cable, a Liberal Democrat, has said that the threshold for the levy should be for homes valued at no less than 2 million pounds. A tax at that level won’t deter foreign buyers and may target those on low incomes who are equity rich, said David Adams, a managing director for property broker John Taylor. “Accountants will use clever schemes to help the wealthy avoid paying it,” Adams, who is trying to sell a house in Kensington for 18 million pounds, said by phone. “It will fall upon many elderly retired people who happen to live in central London.”

Knight Frank compiles its luxury-homes index from its own appraisal values of a sample of the same
properties in the 13 most expensive neighborhoods o f central London, including Belgravia, Kensington and Knightsbridge.

“The rising level of speculation over a potential mansion tax or new wealth taxes appears to have failed to dampen demand for prime London property,” Bailey said in today’s report.

International buyers to support prime London home prices

KUALA LUMPUR/LONDON (Jan 6): The residential property market in the Prime Central London (PCL) area will remain bullish in 2012, spurred by demand from foreign investors looking for a safe haven amidst uncertain global market conditions, said UK real estate agents and property consultants.

Almost every forecast is saying prices in PCL will go up in 2012, albeit at a slower pace than last year, said Camilla Dell, managing partner of Black Brick Property Solutions.

Compared with a 12% growth last year, PCL property price values are expected to rise between 3% and 5% in 2012 motivated by continued demand from foreign investors and buyers.

“Prices in the core prime areas of London such as Knightsbridge, Mayfair, Belgravia, Kensington and parts of Chelsea will be cushioned from any price falls and are likely to go up due to low supply and continued demand from overseas buyers and investors,” Dell said.

“Demand from international buyers should continue with force in 2012 as wealthy buyers continue to look for safe havens for their money. Demand will probably be highest from emerging market countries such as Asia, Africa, Russia and the Middle East. The Arab Spring and concerns in Russia about upcoming elections have all caused an increase in buyers from these countries,” she added.

Dell forecasts there will be an increase in Asian buyers for London property both for personal use and investment due to the recent tax increases in Singapore and restrictions on borrowing in Hong Kong.

Martin Bikhit, managing director of Kay & Co, also believes that the stamp duty increases in Singapore coupled with the sustained weakness of the pound is likely to result in continued demand for prime rental London properties. However, he warned investors to look at the quality and location of the product carefully before buying.

Overall, Bikhit expects to see a short-lived price fall in the UK this year but “PCL prices will continue to buck the trend and push ahead,” he said.

Vision Homes director Giles Underhill concurred, saying rising Asian wealth and the popularity of the UK as a safe haven for money from politically and economically troubled states in Europe and the Arab World will continue to push prices up. “London platinum postcodes will continue to soar as prime London property has effectively become a global community and its value has almost no connection to domestic affordability,” he said.

On the UK rental market, Bikhit expects more people having to rent and predicted rents to increase by some 3% to 4% this year. “In all probability, this trend will continue for the next four to five years, at around the same rate of growth each year. As a result we will see an increase in overseas buy-to-let investors,” he said.

London Luxury Prices Rise for 14th month in a row

London’s luxury market saw prices increase for a 14th consecutive month in December 2011 as overseas property buyers slugged it out to buy “safer” investments and to compete in a sector that is beginning to suffer from a severe lack of stock, international agency Knight Frank LLP told OPP this week.

The prime central London market has seen the price of houses and apartments leap up to an average of £3.7 million (US $5.7 million) and the December rise pushed things up by a further 0.8% versus November.

According to the latest Knight Frank report, luxury home values in London are now 7% up on their previous peak in March 2008.

“Demand for prime London property in 2011, despite uncertainty resulting from the euro-zone debt crisis and on-going global economic uncertainty, outpaced supply and led to strong price performance,” Liam Bailey, head of residential research, told OPP.

For the full year, prices surged by a shade above 12% and prime central-London prices have risen around 40% since the market’s lowest point in March 2009, says Knight Frank.

The only worrying trend is that the number of new instructions to sell in neighbourhoods such as Knightsbridge and Belgravia plummeted by 6% year-on-year in the fourth quarter of 2011 says Knight Frank.

Agreed, says Camilla Dell, founder of Black Brick Property Solutions LLP, adding that “tight supply has remained a feature of the prime central London property market through 2011 and we see little reason why this might change materially in 2012.”

Residential curb spells boon for alternative assets

By Uma Shankari

INVESTMENTS into strata-titled office, retail and industrial units in Singapore, as well as overseas homes, are set to pick up as investors search for alternative assets to buy following fresh government measures to cool the residential market here.

Analysts expect to see a sharp drop in demand from foreigners and corporations for private homes in Singapore, which will lead to a moderate drop in overall demand. Liquidity could instead flow into other asset classes, the analysts said.

The government on Wednesday announced fresh measures to curb demand for private homes, including an additional buyer’s stamp duty of 10 per cent for foreigners and corporations on top of the existing buyer’s stamp duty of up to 3 per cent.

‘The latest measure could divert activity to other segments, such as strata-titled commercial and industrial sectors, since these are not affected by the additional stamp duty,’ said DBS Group Research.
Nicholas Mak, head of research at SLP International, likewise noted that interest in small strata-titled industrial and office units could pick up.

Interest in such properties began to slow down in August, when negative news from the eurozone started to adversely affect local investment sentiment. Prices of small industrial units have also climbed by about 30 per cent year-on-year, making them less attractive to investors. But now, interest could pick up again as cash-rich investors look for assets to soak up liquidity.
‘There could be a small percentage of buyers who may shift from buying a home in the core central region (CCR) to buying industrial properties,’ said Mr Mak, noting that ‘most property investors are still unfamiliar with the industrial property market’.

Small retail shops (sometimes as small as 150 square feet) have also started to appear on the market of late, market watchers said. They could find more takers going forward.

Interest in overseas properties could also heat up. In addition to foreigners who will now look elsewhere, Singaporeans – who now have to pay an additional buyer’s stamp duty of 3 per cent when they buy their third and subsequent residential properties – might also look abroad.

‘As the latest measures by Singapore government would turn away funds for property investment from foreigners, some of these funds could find their way to other overseas markets, such as those in countries with transparent rules and large Asian migrant communities,’ said Mr Mak. ‘These countries include Australia, Canada, UK, New Zealand and the US coastal cities.’

Camilla Dell, a managing partner at UK-based property consultancy Black Brick Property Solutions, said that her firm is already starting to see an increase in the level of enquiries from Asian and other overseas investors who were previously considering investing in the Singapore property market, but have now changed their mind because of the tax hikes.

In addition to the additional buyer’s stamp duty, investors in Singapore have to pay a seller’s stamp duty of between 4 and 12 per cent if they re-sell their units within four years of purchase, she pointed out.
‘All of this makes Singapore far less attractive for property investors, and London is bound to benefit as a result, where the tax system is far more favourable, particularly for overseas investors who pay no sellers tax or capital gains tax if they are a UK non-resident,’ Ms Dell said.

‘Stamp duty can also be significantly reduced in the UK as if the property is owned in a company name, buyers pay very little or no tax on the acquisition.’
Analysts also noted that most of the demand for strata-titled commercial and industrial units and overseas properties will mostly shift from the prime CCR area, which includes the prime districts 9, 10 and 11, Marina Bay and Sentosa Cove.
According to data compiled by SLP International, foreigners and corporations bought 36 per cent of all homes sold in the CCR from January to November 2011.

‘A foreign buyer of a private home here in Singapore will have to take a very bold move in investing amidst the global crisis and a grim economic outlook in 2012,’ said PropNex Realty chief executive Mohamed Ismail.
In contrast, in the outside central region or OCR (which is a proxy for suburban mass market locations), foreigners and corporations accounted for just 16 per cent of all sales in the first 11 months of this year, according to SLP’s analysis of caveat data from URA Realis.

Singaporeans bought 71 per cent of all home sold in the OCR, and demand from this buyer segment is expected to hold somewhat.

Live in the present with new-build

Many of us prefer period properties — but there are signs that the tide may be turning as buyers

… discover the hidden charms of new-builds – by Zoe Dare Hall

Proposals unveiled last week by the government to boost the housing market — including a scheme to help encourage the return of 95% mortgages — are, as ever, directed towards the new-build market, which is, at present, turning out less than half the number of properties required. So, does buying a new-build, rather than a Victorian or Edwardian home, make sense?

At the top of the market, in what estate agents refer to as “prime central London”, the answers appears to be yes. Camilla Dell, managing partner of the buying agency Black Brick, says that new-build properties priced at £5m or more command a 25% premium over their period equivalents, especially those offering large amounts of the lateral space that is so popular with well-heeled foreign buyers.

Across the country as a whole, however, the premium commanded by new-builds is a more modest 2.2%, according to Nationwide — down from 13.4% in 2000 — suggesting that, on average, those who bought a new home a decade ago won’t have done as well as someone who bought a period one. In the capital, the average price is 24% lower than for a comparable older property, Knight Frank estate agency has found.

Utility bills are likely to be lower in new-builds. Another advantage is ease of maintenance “In London and the southeast, where there is a greater heritage of well-built homes, there is an ‘old property premium’, and it has got higher over the past 35 years,” says Liam Bailey, head of residential research at Knight Frank. “Even though high-quality new-builds will sell for a premium, buyers tend to value aspirational period property more in the south. The key for developers is to deliver a product that they can demonstrate has the advantages of an older property — solid construction, character and staying power, so it doesn’t date.”

It’s the same story in the shires, where old properties are always the preference — and cost 15%-25% more than modern ones, according to Charles Birtles, director of the buying agency CB Property Search.
“People looking in the country want the chocolate box with the worn flagstones and aged beams,” he says. “Even pastiche new-builds can’t command the same price as period homes.”

In the north, by contrast, newly built properties tend to command a premium, in part because the housing stock tends to be of lower quality. Bailey says this trend reaches its height in the northwest, where average new-build prices are 15% higher than those for older properties.

And the sector may be about to see a wider spike in popularity, says Kate Faulkner, director of Designs on Property, an independent advice service. “Until 2008, I would never have recommended buying a new-build home, because of the premium they carried — and because so much was being built in city centres that prices weren’t sustainable,” she says. “Since then, the market has changed. We’re building 100,000 homes a year when we need 250,000, and I think new-build property might be a good investment.”

Utility bills are likely to be lower, too. “New-build homes should be a Grade A on the Energy Performance Certificate. Old homes are typically D or E,” Faulkner says. Another advantage is ease of maintenance. “Everything comes with a guarantee, and you shouldn’t have any repairs for five years.” New houses don’t have to be boring and samey, either.

The run-up to the year’s end could be a good time to haggle, with developers keener than usual to shift stock. That said, you should choose carefully. Although new homes don’t depreciate the moment you cross the threshold, in the way that, say, new cars do, older phases of properties on a development will typically be less attractive to buyers than the latest ones. If it’s a large block, always pick a property that has something the others don’t — the corner plot or an end of terrace. “And look at how easy it is to park,” Faulkner says.

Gary Patrick, a regional sales director for Barratt London, says the improved quality of build and facilities is broadening the appeal of new-build homes beyond first-time buyers to older downsizers, upgrading families and thirty- or fortysomething professionals wanting a more vibrant city-centre location.

“We are finding a much greater willingness in London to buy into new-build developments,” he says. “People are more aware of the advantages of homes built to higher energy standards, with modern specifications. Well-insulated homes are less expensive to run, and modern kitchens and bathrooms are pleasant to live with. These factors appeal across demographic boundaries.”

Laura White, 43, a fine-art lecturer, recently sold her period house in Stoke Newington, north London, and bought a three-bedroom flat for £385,000 with her boyfriend, Mark Wright, 49, also an art lecturer, in Barratt London’s Dalston Square, a development in Hackney.

“Dalston is young, fast-paced and bursting with creativity, and the sense of community is incredible,” White says. “We wanted a new-build flat because we saw it as an opportunity for a fresh project that we could decorate ourselves — something we felt restricted by with our previous homes because period houses often have so much character already.”
Who would have thought it: period homes with too much character? Maybe that will be the view of a new generation in love with their new-builds.

New UK properties find strong Asian support

Singaporeans make up 10% of buyers in projects where construction hasn’t begun

By UMA SHANKARI (Singapore)

SINGAPOREAN buyers now account for around 10 per cent of all purchasers at ‘new-build’ properties in Central London, industry players say.

According to estimates from sales agents at major property firms, buyers from Asia make up about 40 per cent of all investors for new-build projects (that is, projects where construction hasn’t begun) in Central London. And Singaporean buyers figure prominently, accounting for about a quarter of transactions by Asian buyers, they said.

Many UK-based developers now launch properties in Asian cities such as Singapore, Hong Kong, Jakarta and Kuala Lumpur ahead of their UK release dates to capitalise on buying interest from this part of the world. In Singapore, this has translated to some two to three new projects from London and the rest of the United Kingdom being marketed here every weekend, industry players said.

James Talbot, Savills head of international sales, told BT recently that UK developers hope to sell enough units in Asia to fund the start of construction. This is because Asian buyers are more willing to buy properties off the plan, while buyers in the UK prefer to pick up units in only completed properties, he said. ‘Asian buyers accounted for about 40 per cent of new developments that were sold in 2010, and the buying trend has continued into the first three quarters of this year,’ Mr Talbot said.

He said that Singapore buyers could account for about half of these Asian buyers at some launches. Other agents put the figure at closer to 25 per cent.

UK-based property consultancy Black Brick Property Solutions has also noticed the keen Asian interest in ‘safe haven’ London.’Asian clients represent over 22 per cent of our client base as they have a huge appetite for London property,’ said Camilla Dell, managing partner at Black Brick. ‘It is viewed as a safe haven, many children are educated in the UK, and the weakness in sterling is a key driver.’ Black Brick noted that Singapore clients are benefiting from a 35 per cent discount on London property prices compared to 2007 as a result of currency movements. Similarly, Hong Kong buyers now benefit from a 25 per cent discount, while Malaysian buyers are seeing a 28 per cent discount.

Central London estate agency Kay&Co also noted that bigger homes are still in vogue. Some 41 per cent of the firm’s overseas applicants – 25 per cent of whom are Asian – purchase properties in excess of £2 million apiece, Kay&Co said.

But buyers here are not indiscriminate, agents said. Asian buyers are looking for attractive ‘buy-to-let’ investments in London. Mark Collins, head of residential at CB Richard Ellis (CBRE), said: ‘They are ideally looking for properties in areas of strong rental demand and from developers with established and trusted brands.’

Added Knight Frank Singapore’s head of international project marketing, Linda Chern: ‘Right now, week in week out, there are a lot of property launches (in Singapore), so clients are spoilt for choice. So unless you have a good location and attractive prices, the take-up is not going to be good.’

But there is no doubt that sales are taking place every weekend. Buyers are usually a mix of investors and those buying for their children who are studying in universities in London.

Knight Frank, for example, marketed Baltimore Wharf (in London’s Canary Wharf) several weeks ago, and sold around 15 units in the 473-unit project in Singapore. Ms Chern attributes the take-up to the project’s good location.

Boutique London developer Vision Homes also recently brought The Metropolis to Singapore. The small 15-unit development in the Elephant & Castle area sold well and Singaporeans bought around 30 per cent of the units sold, the developer said.

Savills is marketing Caro Point, which is next to the Thames Embankment (among other projects), while CBRE launched Langham Square in Putney, London. Knight Frank recently previewed One Tower Bridge, a luxury development on the banks of the River Thames.

Singaporeans make up 10% of buyers in projects where construction hasn’t begun

Ego Warriors

As high-end properties are increasingly sold off-market by vendors who guard their privacy…

… discreet professionals specialise in finding hidden gems – and keeping the peace

By Tanya Powley

It is a well rehearsed fact that, since the downturn, the rich are getting richer. According to a recent report by Merrill Lynch and Capgemini, the number of millionaires across the globe grew by 8.3 per cent to 10.9m in 2010. The total wealth of these individuals rose to $42,700bn, up from $40,700bn in 2007. Which makes high-end, prime-location property more attractive than ever as a secure investment.

However, buying prime property is fraught with problems from “silent listings” – property which is never advertised – to vendors reluctant to sell to anyone who appears wealthier than themselves.
Enter the high-end buying agent: property professionals who have the well-honed skills to secure a home despite the secrecy and jealousy.

“I often say a good alternative career for what we do would be a diplomat. We have to massage egos left, right and centre,” explains Jeremy Davidson, a property consultant who specialises in properties that cost £10m or more in the most exclusive neighbourhoods in London.

He notes that it can be common for vendors at the upper echelons of the housing market to become jealous if they think the person buying the house is richer than them. Tensions around these issues can scupper a sale.
“It wouldn’t happen if they were selling their business but, because it’s their home, people often lose their sense of rationale,” says Davidson.

This is where a buying agent’s negotiating skills come into play, in order to smooth the path of a sale and keep both parties happy. “It can sometimes be a game of male egos and it’s our job to make sure everything stays on an even keel,” he explains.

Increasingly the main appeal of buying agents is their ability to access silent listings. In other words, the best agents are those with inside knowledge, who know where to find properties that are never going to be seen in an estate agent’s window or on the pages of a glossy magazine.

The reasons behind such discretion are usually to do with confidentiality, privacy or security – as well as a belief held by many wealthy owners that it is vulgar to advertise their home.

Buying agents can be found in most of the world’s prime property markets. However, they are more familiar in some regions than in others. Sales of multimillion dollar homes in Australia, for instance, are nearly always silent listings, says Tracey Finnegan of Premium Property Finders, a Sydney-based buying agent who has worked with clients from all over the world.

“People who own multimillion dollar properties often don’t want to list their property on the market as they don’t want just anyone coming around their house or looking at their photos online,” says Finnegan.
“Also, some agents want to see the colour of the money and it is my job to convince the agent or vendor that they are serious buyers and have finance in place,” she says. This often involves the buying agent providing the seller with a net asset value statement from the prospective buyer in order to have a look around the house.

Michelle O’Brien, 40, is chief executive of her own mining company and used Finnegan to find a home in Point Piper, an exclusive suburb overlooking Sydney harbour. Her property was a silent listing and Finnegan negotiated the price down from $9m to $7.5m.
“We would never have found this property without Tracey as it was a silent listing,” says O’Brien. “Tracey does all the hard work and negotiation for us,” she says.

Private deals are becoming even more popular in London as well-known millionaires seek to avoid the spotlight of an open market transaction. The Buying Solution, one of the UK’s largest buying agencies, has purchased around £150m worth of property that was not publicly for sale since the start of the year – representing almost half of the firm’s purchases so far in 2011.

Camilla Dell, managing director of Black Brick Property Solutions, says many rich sellers do not wish the general public to know about a sale, especially if they are well-known, because it may attract window shoppers.

By selling off-market, a vendor can ensure that only known buyers, who have been vetted beforehand, are allowed access to the property.

This can sometimes involve not showing the property to buyers of a certain nationality in order to make sure the seller is not recognised. Dell is currently working with a house that she cannot show to potential buyers from the same country as her client.

However, buying an off-market property does not always mean individuals are getting the best deal. Agents admit that buyers have become “obsessed” with only viewing off-market properties, believing that they are always better than others.

Off-market properties can end up more expensive if a vendor is unwilling to move from a set price that has not been tested on the open market. Many vendors also keep their home off the market so that it seems more exclusive and to hide how long it has been up for sale. It is the buying agent’s job to secure the best price for their client.

“I’m absolutely ruthless about only short listing the best quality properties at their right price and I will probably only include 10 per cent of all the properties I see,” says Barbara Wood of The Property Finders, a buying agent that specialises in upmarket homes in Spain, Italy and the UK.

The services of a property consultant can be particularly helpful when buying overseas. Many buyers lack the understanding of local law, traditions and language skills needed to negotiate overseas property.

Stuart Baldock of Property Vision France has worked with a wide range of nationalities including buyers from Jamaica, UAE, Russia, India and the US. He says international buyers need advice about fashionable second home destinations such as the Côte d’Azur: “The prices typically advertised are very optimistic so you really need somebody who knows the market.”

Paul Belcher of Ultissimo, a buying agent for Lake Como, says the Italian market can be a complex one for non-residents. “To conclude a transaction … probably takes more time than most clients actually have,” he says.

This was the case for Stuart Kingham, a Hong Kong-based computer programmer, who bought a second home in Lake Como through Ultissimo. “Before we found Ultissimo we were at a little bit of a dead end … We had spent years trawling the internet and going through estate agencies,” he says. In the end, he purchased a renovated silk factory without ever visiting the property. “Ultissimo helped us with arranging the mortgage, lawyers, bank accounts, everything,” says Kingham.

Buying agents stress that it’s not just about finding a property for a client. For those who want the full service, agents will be able to provide advice on installing the latest green technology or on an interior design service.

This all comes at a cost. Buying agents across the globe will typically charge a one-off retainer flat fee and then a success fee of between 2 and 3 per cent of the property price.

It can also take a long time to find a client’s dream home. Baldock says he recently bought a multimillion pound home in France for a client within three months, while it took three years to find another client’s perfect house.

Similarly, Byron Rose of Rose & Jones, an Australian buying agency, was engaged to secure the waterfront property of a client’s neighbour. “The deal took over 12 months to complete but the client now has over 3,000 sq m of harbour front property,” says Rose.