May 2013

Black Brick is a fast-growing company. However, our focus on prime Central London (PCL), the South East of England and the so-called Home Counties surrounding London means we fall firmly into the camp of a high service level ‘boutique’ property consultancy. Yet despite our relatively modest size and specialist expertise, our international client base is increasingly broad. We continue to believe this is entirely reflective of the breadth of overseas demand in the wider market – and that such diversity remains a key on-going support to PCL property prices. Over 30 nationalities acquired properties at the One Hyde Park development. Our current client base includes buyers from Europe, Asia, Middle East, Africa and Australasia encompassing India, Malaysia, Russia, Italy, Spain, Oman, Cyprus, Saudi Arabia, Turkey, Hong Kong, Nigeria, Pakistan and others besides.

Importantly, the drivers for our clients’ property purchases remain similarly diversified. Recent client sign-up has remained strong with a healthy mix of potential owner-occupiers and investors looking for long-term opportunities, safe-haven assets or wealth diversification. Among owner-occupiers some of our clients are families relocating to London to take advantage of its high quality schools, culture and leisure opportunities while others are attracted for business reasons by London’s low corporate tax rates, vibrant international business community and advantageous timezone. Other buyers are simply looking for an asset that offers some protection from the vagaries of financial markets at a time when geopolitical and financial risks remain high – and the risk-reward in other asset classes appears unattractive. With emerging market wealth creation still in its infancy, we believe capital that is made in the faster growing economies of Asia, the Middle East and Africa will continue to find its way into tangible assets including prime property.

London: multi-millionaire capital of the world

Recent research shows that London is now home to more multi-millionaires than any other City in the world, though cedes top spot in the billionaires’ league table to New York. As we wrote last month, the weakness of the pound continues to play its part in attracting the interest of such wealthy overseas buyers to prime Central London property. For Asian buyers in particular, the strength of currencies including the Chinese renminbi, Thai baht and Malaysian ringgit have offset much of the recent PCL property price rises in sterling terms. Within the broader international prime residential market, London’s resilience and diverse demand base continues to stand out. Prices of prime homes in New York fell 9.9% in the first three months of 2013, according to a recent survey.

Recent activity here at Black Brick has remained brisk. With their summer holidays already in full swing we have seen a marked pick-up in interest and viewings from our expanding Indian client base. We are expecting the remainder of the summer to be extremely busy, with a further influx of potential buyers from the Middle East after the end of the Holy Month of Ramadan on August 7th. According to recent research from prime development specialists Candy & Candy the wealth of Ultra High Net Worth individuals is expected to rise 30% in the next four years. The report says that a trophy property in one of London’s best postcodes is “often at the top of the shopping list for wealthy global citizens”. The report also examines the real costs to buy, occupy and sell a £10 million property in London, New York, Hong Kong and Singapore. Despite the recent hike in stamp duty rates applicable to high-end UK property, the total costs associated with super prime London property are less than half those of new York and Singapore and around a third of those in Hong Kong. Given London’s many other attractions to ultra high net worth individuals, it’s not hard to see why so many of the world’s financial elite focus their property ambitions on the UK capital.

On the supply side we have seen a small increase in quality properties coming to market in recent weeks, but the additional volume is typical for this time of year and insignificant in the context of the strength of demand. Meanwhile, the decision by the UK government to exempt central London from its controversial plans to allow office-to-residential property conversion without official planning permission is yet another example of how PCL’s protected status severely limits the potential for new supply.

Stamp duty rises one year on

The past month has seen the first anniversary of the introduction of the 7% stamp duty rate on residential property worth more than £2m. The latest industry data shows the limited impact that these measures have had on international demand. Unsurprisingly, the higher rates have had the greatest impact on properties valued at around or just above the £2m cut off level. Higher up the prime market it is hard to discern any meaningful impact at all past a brief hiatus in transaction volumes as the details were debated and finalised.

Knight Frank’s prime Central London index rose 0.7% in April, the thirtieth consecutive monthly rise since October 2010. PCL prices have now risen 2.9% since the start of the year and 7.7% over the past 12 months. According to Knight Frank, new buyers and viewings have risen a heady 45% in the first four months of 2013 compared to the same period in 2012. The latest figures from the Land Registry show just how strongly the bottom end of the prime market in London has been performing in particular – with completed transactions in the £1m to £2m bracket jumping 84% in between March 2012 and March 2013.

In the wider UK residential property market the average value of a typical home continues to edge higher, supported by low interest rates and a gradually improving employment backdrop. According to the Halifax House Price Index, house prices rose 1.1% in April from March for a 2.0% rise over the past year. While overall transaction levels remain relatively subdued, of note among the latest data is the pick-up in activity from first time buyers as the government’s Funding for Lending scheme continues to drive fixed mortgage rates to new lows and encourage less stringent lending criteria. A number of UK housebuilders have also already reported the positive impact of the government’s Help to Buy scheme since its inception on April 1st .

Tom Kain joins Black Brick and Caspar Harvard-Walls is made Partner

In Black Brick news we are pleased to announce the arrival of Tom Kain as a buying consultant. Tom started his career at concierge company Quintessentially, where he assisted over 30 high net worth individuals with their business and social interests. His clients included a billionaire and several high profile celebrities. Tom then moved to Foxtons in South Kensington where he built an impressive record of sales over a three year period and gained a reputation as a straight talking and effective negotiator. Prior to his arrival at Black Brick, Tom worked for Knight Frank in their Chelsea office. With over 5 years’ experience in residential property, Tom has an in-depth knowledge of prime central London and has developed the skills to deliver an exceptional service to clients that demand the very best. We’re delighted to welcome Tom to the Black Brick team.

We are also very pleased to announce that Caspar Harvard-Walls has been promoted to Partner with effect from 1st April 2013 following his exceptional first year in which he provided a very high level of service to a range of clients.

And finally, Camilla Dell and Caspar Harvard-Walls will be holding meets across Asia in early June. We are in Singapore on June 3rd and 4th, Hong Kong on June 5th and 6th and in Kuala Lumpur June 7th to 11th. Please feel free to email or call us to book an appointment.