The push
Despite the global f inancial crisis - or, more
accurately, because of it - prices in the London
neighbourhoods of Belgravia, Chelsea, Kensington,
Knightsbridge and Mayfair have risen 23% from
their previous peak in March 2008, according to
real estate brokerage Knight Frank LLP.
Fear as much as greed drives the super-prime
market. Although a third of London’s super-prime
buyers are British, safety-seeking internationals
predominate. Oil sheiks want an Arab Spring
insurance polic y. Wea lthy French have f led
President Francois Hollande’s new tax regime.
Good value?
But is prime London property good value on a global
scale? Soaring house prices in the most fashionable
neighbourhoods such as Knightsbridge and Mayfair,
along with the impact of rising property taxes over
the past few years, have prompted concern among
property professionals that the wealthy could begin
to take their investments elsewhere.
Ultra-high-net-worth individuals (UHNWI)
from countries in the troubled euro zone - Cyprus,
Greece, Italy, and Portugal - have sought to
shift assets out of the besieged currency and into
pounds. For Russians, the “Putin factor” - the fear
of a sudden shift in political winds - cannot be
underestimated.
Several changes to the marketplace, such as the
higher stamp duty bands of 5% and 7% introduced
in the UK over the past few years, and the annual
tax on enveloped dwellings introduced in April
2013 (essentially taxing those who buy properties
through offshore companies) have already impacted
on foreign buyers.
And there could well be more on the way: the
“mansion tax”, an annual levy on homes worth more
than £2 million, proposed by the Liberal Democrats,
plus the extension of the 18 – 28% capital gains tax
to apply to non-residents as well as British taxpayers,
which is expected to come in to play next year.
The pull
Competitively priced
Here’s the pull: for any emerging-markets tycoon,
a London house confers an “I have arrived” status.
And then there’s the prestige of a British education,
with their kids attending famous British boarding
schools like Eton or Harrow.
However, London is still competitively priced in
comparison with the world’s two other top financial
centres – New York and Hong Kong. A new report,
compiled for Middleton Advisors, compares
property prices, as well as both the buying costs and
ownership costs of homes in the prime hotspots of
these three cities.
London has become a centre of excellence for
UHNWIs. From restaurants and galleries, through
schools and universities, to wealth management and
professional services, London offers a standard of
living that few rivals can match.
Since 2009, more super-prime properties have
traded hands in London than in any other city,
including Hong Kong, New York and Singapore;
last year, the city accounted for about a third of
the approximately 300 super-prime sales globally,
according to research from Savills.
www.reimag.co.za
At first glance, London does not look cheap. Today
the average cost of a prime, two-bedroom apartment
in Knightsbridge, the capital’s most expensive area,
is £1.69 million, up 86% from £908,972 in the first
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