Offshore Guidebook | Real Estate Investor Magazine Offshore Guidebook 2014 | Page 47

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 quar ѕȁ