Ag­gres­sive bid­ding, with bil­lions to in­vest

An in­sider’s view of the ‘su­per­prime’ Lon­don mar­ket

The Daily Telegraph - Property - - Marketplac­e - Lulu Egerton

Imust be em­broiled in the long­est flat pur­chase known to man. Hav­ing won a sealed bid in mid-Fe­bru­ary by go­ing £151,000 over the ask­ing price, pay­ing a £15,000 non-re­fund­able de­posit, I still haven’t ex­changed. I’m on red alert for fear of be­ing gazumped, but hope to ex­change any minute.

Back to the big­ger pic­ture and an over­view of th­ese past six months. The saga of Home In­for­ma­tion Packs con­tin­ues, the June 1 start date hav­ing been de­ferred to Au­gust 1 while yet fur­ther amend­ments were made (yawn), with HIPs now only ap­ply­ing to prop­er­ties with four bed­rooms or more.

Tony Blair has left No 10, Gor­don Brown fi­nally wears the crown. What will his premiershi­p bring? Will it bring desta­bil­is­ing eco­nomic and fis­cal change, so that flash­ing the cash be­comes a thing of the past? Or the scrap­ping of non-domi­cil­ity, which will turn our for­eign friends away? I think not. In­ter­est rates rose by 0.25 per cent to 5.5 per cent in May, then last week to 5.75 per cent; from a top-end point of view, noth­ing too alarm­ing. But the bears in the City feel we will be at 6 per cent by Christ­mas. We at Lane Fox are in ad­vanced dis­cus­sions with Strutt & Parker to com­bine our two busi­nesses. Lots of change is afoot.

In prop­erty terms, it has been an ex­tra­or­di­nary time. In some cases, prices have risen by as much as 30 per cent. Chelsea Bar­racks has gone un­der the ham­mer for about £1 bil­lion, to a Qatari-backed group. The Dray­cott Es­tate, Chelsea, is up for sale for around £50m. For the first time, I have felt Lon­don is in the grasp of a dif­fer­ent type of buyer, a dif­fer­ent type of money, a dif­fer­ent type of sale. It’s not just City bonuses and oli­garchs fu­elling the stag­ger­ing prices we have seen re­cently – it feels like we are in the grip of some­thing else. The past six months has seen the emer­gence of prop­erty funds with bil­lions to in­vest, which bid ag­gres­sively on any­thing they can lay their hands on. We’re on a carousel that seems un­stop­pable, yet we know it must and will stop. Lon­don is the place to live and the place to in­vest. Not just for us English, but for ev­ery­one else.

The in­ter­na­tional buy­ers are here in num­bers that stun, a stark con­trast to 10 years ago. They are pre­dom­i­nantly Euro­pean but there are grow­ing num­bers of Rus­sians, Ja­panese, Chi­nese and In­di­ans. Plus there are those from war-torn and frag­mented Arab coun­tries, head­ing here as their re­gion be­comes more in­se­cure and volatile. Even the for­mer prime min­is­ter of Thai­land is here, buy­ing Manch­ester City foot­ball club for £81m.

The fam­ily house mar­ket con­tin­ues to out­per­form flats by a long way. Pur­chasers want sub­stan­tial homes for the long term for their grow­ing fam­i­lies and will do any­thing to se­cure space. They buy blocks of flats to con­vert into houses, happy to go through mas­sive re­fur­bish­ment pro­grammes in or­der to get what they want in the style and stan­dard they de­sire. For ex­am­ple, the Royal En­to­mo­log­i­cal So­ci­ety head­quar­ters in Queen’s Gate, South Kens­ing­ton, re­cently sold for more than £10m. The new owner plans to re­fur­bish it and keep it as a house. Sim­i­larly, one of the last re­main­ing seven-storey houses in Corn­wall Gar­dens, South Kens­ing­ton – with no gar­den and no lift – was sold to a Rus­sian for £8.5m (£250,000 over the ask­ing price) and a house in four flats in SW10 to a fam­ily for £7.5m.

The wave of money com­ing into the prop­erty mar­ket con­tin­ues to ap­ply great pres­sure to the tight sup­ply line. Buy­ers are pre­pared to pay next year’s price this year in or­der to se­cure a piece of prime Lon­don. As a wise econ­o­mist once said to me: “You never pay too much, you some­times pay a lit­tle soon” – and this is the view buy­ers are tak­ing. The fu­ture looks bright, with no black clouds ahead. But din­ner party chat has started. “It can’t last for­ever”, is what ev­ery­one is say­ing. I dis­agree: my view is that we’re in for an­other storm­ing year. I just hope I ex­change on my flat be­fore the mar­ket rises any fur­ther.

Lulu Egerton is a di­rec­tor of Lane Fox es­tate agents

A snip at £10 mil­lion: the for­mer HQ of the Royal En­to­mo­log­i­cal So­ci­ety, SW7

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