Hamish McRae: The challenges of living in the super-rich playground

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The Independent Online

It's trophy London. The world's most expensive flat, a penthouse overlooking Hyde Park, has just gone on the market for £84m. Earlier this week Britain's most expensive office block, the Gherkin (or more correctly 30 St Mary Axe) was sold for £630m. Add in the mass of foreign companies buying British ones, the art fever that has erupted at Christie's and Sotheby's, and of course the surge in City bonuses and you have to ponder quite why such huge wealth seems to be accumulating in London. You have also to ponder what this might mean for the rest of us.

It is strange, to those of us who have become long-time London residents, to come to terms with its new iconic status as the playground of the global super-rich. It has over 15 or 20 years become the most international place on earth. Forget the stuff about "the capital of cool"; it is the place where, more than any other, the seismic force we call globalisation is choreographed.

You can measure this in terms of its cost. It has not just the flats and the offices but also (I was surprised by this) the most expensive industrial property, which is around Heathrow. But cost is a function of demand. Why the demand?

The key is globalisation. You can measure London's status on a series of indicators. More people fly in through its five airports than any other place in the world. More books are published than anywhere else. On most of the City indicators of international business London is number one, ahead of New York. And within the M25 there is the largest non-national professional community on the planet.

This last point seems to me to be the most interesting of all: the extent to which London, but also its hinterland, has become a magnet for global talent as well as for global money. London gets more than its share for a number of reasons. Russian, Middle East and Hong Kong money more naturally comes to London than New York. I think the UK is helped by the fact that it is English-speaking but not American.

But if, as a non-US professional, you want to earn serious money there is really nowhere else. It is hard to get a visa to work in the US and the job markets in Europe are segregated by language and other barriers. So the ambitious young come to London to, I believe, our huge benefit. The tiny number of global super-rich who buy the penthouses on Hyde Park or the Impressionists at Christie's are the peak of a mountain of hard-working professionals attracted from all over the world.

For anyone who remembers the dreary Seventies, when rubbish piled in the streets and columnists wrote of Britain going into absolute decline, not just relative decline, this is thrilling. But of course it brings challenges, which we have to meet.

One is to cope with the "Wimbledon effect", the fact that the UK has created a global playing field but most of the best players are foreign. Mercifully we have not quite reached that stage in business and finance. Britain's assets overseas remain larger than foreign assets in the UK but we have to ask whether it is safe to have so much of our economy controlled from abroad. A second is the regional divergence, the extent to which London has become almost an island state. There are of course other clusters of economic success. But the magnetic effect of London must remain a concern.

The greatest concern, however, is surely the social pressures that rising inequality can create. You have to be careful here with the figures. Statistically, if a rich Russian billionaire moves to London and buys a football team, that must increase inequality. If he buys a load of foreign players that increases inequality even more. At the other end of the scale, if a hundred Somali asylum-seekers land here with the clothes they stand up in, that increases inequality too.

But it is hard to argue that the rich Russian's arrival increases inequality in a socially destructive way. Indeed, the arrival of immigrants from new EU states will have increased inequality but in economic terms this migration has been a great success.

That said, we do have to acknowledge that the "Trophy London" phenomenon has resulted in rising inequalities and we need to figure out how best to make sure that the wealth that is being brought into the country trickles down right through society. I suspect we are not doing that as well as we should. That, however, is the challenge of success.

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