'If you have to ask, you can't afford it': Super-rich house hunters are changing face of London for ever

They boast prime locations, dazzling interiors and stratospheric price tags.
Click to follow
The Independent Online

I sit on the elkskin rug – yes, real elk – and look around the room. The chairs are white leather, there are coffee table photography books on the tables: Annie Leibovitz, Helmut Newton. Mirrors increase the sense of high self-worth and downstairs there's a painting of a woman doing the splits.

This was a house fit for an oligarch: indeed, it was expressly designed for such. House 6, in Cornwall Crescent, is one of two grand Regent's Park mini-mansions going into what estate agents call the super-prime market: the luxury, £15m-plus, "if you have to ask you can't afford it" central London bracket. Oddly, despite the nation's straitened circumstances, the super-primes are thriving.

Indeed, these two houses – number 6 is £39m, number 11 £29m – are part of eight in the Grade I-listed, John Nash-designed, 1811-vintage cream-coloured terrace. They fit the super-rich bill but, as one agent tells me, they might be deemed downmarket by an oil baron: "Belgravia's the top destination, not Regent's Park."

Still, there's no doubting the prestige. You get a slice of history on the Crown Estate (on a 125-year lease) restored back to its Regency pomp from office use as the HQ of British Land. A butler, Michael Lang, greets me as I walk into the tiled doorway at number 11 (Michael comes with the terrace). There are branded slippers on the doormat, two Damien Hirst spot paintings, photographs of generic children to make it look homely – and upstairs, even a Francis Bacon print, although God knows what the painter of screaming Popes would think about this gallery. It's like a taupe-painted boutique hotel and, as a spokeswoman puts it, "quite Armani". "They've been dressed for the market," says Michael, handing me a coffee and branded napkin. The dressing alone can run to six figures.

It's a small market, says Simon Barry of Knight Frank, joint agents for Cornwall Terrace, who is courting "10 to 12 buyers" for the properties. Who are they? We won't have heard of them, he says, but "if you Google their names they'd pop up. They're not celebrities. Celebrities couldn't afford these houses". Rather, these are for the Russian and Middle Eastern mega-rich; who are now being joined by Chinese, Indian and Singaporean investors. "We're seeing a lot of wealthy Indian families," Barry says. This turbo-charged tranche have usually made their pile from utilities, oil, gas and telecommunications. Any Brits? "Unlikely. British passport holders, perhaps."

As Noel De Keyzer of Savills says: "The English aristocracy can no longer afford these streets."

It's one of the anomalies of the British property market that while the rest of the country languishes in uncertainty, the luxury London sector appears to be booming.

"Appears" is an operative word, because at this level there's always a bit of smoke and mirrors. "The top end of the market is full of people with egos and you can't be seen to be doing badly," says Ed Mead, director of agents Douglas and Gordon. "These are trophy homes for people who like trophies."

The most visible of these is One Hyde Park, launched by the enigmatic Candy brothers, who claim to have sold a record-breaking flat for £140m. One off-record agent says: "I've never met anyone who has bought there," although elsewhere more than half of them have reportedly been sold.

But there's no doubt that the super-primers are on the march, particularly so in the mega-houses of the Knightsbridge hinterland: the Eatons, Cadogans and Lowndeses – all pillars, balconies and railings.

"They love stucco," De Keyzer says. "They like history, grandeur. And they like to be near hotels, casinos and restaurants." Sloane Street is their epicentre and has taken over from Bond Street and while they follow the money – vulgarity isn't unknown – their tastes are changing. "Harvey Nichols is more important to them than Harrods," De Keyzer says. And Damien Hirst sells harder than Louis gilt.

So central prime London is a bit of bull surrounded by bear. "The prime central London market did fall in the recession, but it has bounced back," says Lucian Cook of Savills' research department. "The difference is that it's dependent on international money, not UK money." Savills has just published a report suggesting that over the next five years, the two-speed property market is set to widen, with prime central London expected to rise by 33 per cent compared with a UK average of 12 per cent. "As well as the overseas buyers, there's new demand from the financial and business sector, and prime London is an equity magnet," Cook adds.

"London is driven by a totally different set of factors to the rest of the country." Ed Mead says that the super-primes are sustaining their hold because of our still-cheap currency, London's location advantage and continuing position as a global financial centre – and mostly because these houses represent large and relatively secure piggy banks. "Although the pound has bounced back, it's still a relatively cheap place to buy," he says. "Europeans particularly like it – those from the 'Pigs' countries [Portugal, Italy, Greece, Spain]. It's seen as a politically safe place to park money." Plus they like it here: "The Russians like the schools and the stability," says De Keyzer, who is based in Savills' Sloane Street office.

Barry adds that London has taken over from New York for locational reasons and that the £30,000 annual charge on non-doms, brought in by the previous government, is a mere bagatelle to your average prime punter. "They don't give a toss about £30k," Mead says. "The non-doms never really went, as some predicted. Why would someone want to go to Singapore or Geneva? You'd die of boredom."

And, of course, these London homes are just boltholes; places to keep money and use occasionally as part of a global portfolio.

"They have one in the Côte d'Azur, one in NY and a ski chalet," says Barry. At this level, buyers form companies ("Probably offshore", Mead says) and buy the properties as "special-purpose vehicles, that give tax advantages. Interestingly, as a result of these complicated arrangements, Barry says that the super-prime buyers may not even pay stamp duty on their holdings. "They all have good people around them to do the due diligence," he says.

Some aspects of the market are the same. The buying process is similar to ordinary houses, but obviously, at a different level, and different groups buy in different ways. "The Arabs start at 50 per cent and you have to work them up," says another off-record central London agent. "The Indians like to negotiate for a long time. The Russians offer a price and give you a week to accept or decline." As Simon Barry adds, normal agent rates apply: 1.5 to 2 per cent for single instructions, 2.5 to 3 per cent for joint. "That's another factor that compares well, as agents abroad often charge 5 per cent or more."

As even 2 per cent of £20m is £400,000, one can see why competition for the super-primes is red-hot.

Andrew Giller of house-finders the Buying Solution provides a limousine to escort his rich punters and their people around. "Clients spending more than £15m expect a standard of service and don't want to look for parking meters in London," he says. "So we think it's a good idea to send a car to meet their plane from Moscow."

Perhaps we should be intensely relaxed about the super-primers, to paraphrase Peter Mandelson. Then again, might their million-dollar interventions be partly responsible for the painful London house prices, now reasserted after the recession? It's possible, if not provable. "It does have an effect," Mead thinks. "London is pulled from the top by an aspirational market." And don't think you'll escape at the "lower" end of the market: that is, those chump-change £1m-£3m homes. A new Halifax report says that, despite the downturn, houses costing more than £1m have shifted upwards by £134,000 in a year and, as Barry says: "There's a lot of European money competing in that sector, too. The recent Greek events and Italian tax scenarios have driven buyers here."

Lucian Cook agrees that the super-primes do "provide a stimulus to the central London market. There's a trickle-down effect into the London hinterland. It affects sentiment in the high and middle market – the £500k-£1m market, and even in the mainstream £350k-£500k market." Still, as Cook says, there's a lot of constraint at the moment at the bottom end, which serves only to highlight the growing two-tier market, which will be exacerbated by what he calls a "second slip" in prices. These property values may not be a zero-sum equation, but first-time buyers might pause for thought.

Numbers 6 and 11 are currently for sale in Cornwall Crescent, from £29m. Both overlook Regent's Park. Each house has a suite of reception rooms, gym and media room. Further details from joint agents Knight Frank (020 7861 5487) and Christie's Great Estates (020 7389 2592) www.cornwallterrace.com

Comments