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Looking to London

Новости John Taylor | автор: John Taylor | Обзор прессы | Публикация: 2015-02-03 09:12:20

What does the softening of the British capital’s luxury market mean for NYC? Mystery buyers forking over $100 million for apartments on Billionaire’s Row may grab the headlines, but the real money in [...]

What does the softening of the British capital’s luxury market mean for NYC?

Mystery buyers forking over $100 million for apartments on Billionaire’s Row may grab the headlines, but the real money in luxury real estate isn’t on 57th Street; it’s in London.

In 2014, Britain’s capital overtook Hong Kong as the most expensive city in the world for new residential real estate. The average price per square foot there reached $3,380, according to a December report from commercial brokerage CBRE, which tracked what it called “key global cities favored by high-net-worth individuals.”

Hong Kong ranked second with the average price for luxury homes at $3,290 a square foot, while New York came in third at $3,040.

Yet prices for London’s high-end properties are showing signs of leveling off, if not dropping slightly, brokers say. The change is a result of a stronger pound relative to the euro and the U.S. dollar, coupled with higher real estate taxes and Britain’s upcoming spring election.

London and New York, of course, are often talked about in the same breath — namely because their economies have more in common with each other than they do with the countries they reside in. As a result, many in the New York real estate industry are looking to London as a bellwether.

Sources say the recent slowdown in London can be largely attributed to foreign buyers getting spooked by the political and tax uncertainty. Those buyers account for a huge chunk of the market: According to a 2013 report, a stunning 77 percent of London buyers were either non-British or did not reside in the United Kingdom (49 percent were non-Brits and 28 percent lived elsewhere).

In New York, by comparison, foreigners make up about a third of higher-end condo buyers, according to Census Bureau estimates and other sources.

Sources say if New York’s foreign buyers begin to turn elsewhere, the New York luxury market will see a similar softening. But for now, they note, New York could pick up more foreign buyers as result of the uncertainty in the U.K. and in other parts of the world.

But insiders note London’s leveling off or dip must also be viewed in relation to the titanic increases luxury prices there saw during the boom of the aughts and since the bust.

“In 2009, we set off on quite a boom and prices rose rapidly in 2010, 2011, 2012,” said David Adams, a broker at the European firm John Taylor, which recently partnered with the Corcoran Group in New York. “Many parts of London are now 30, 35, 40 percent above where they were at the peak, whereas, in New York, I believe, they’re back at 2007 levels.”

Priciest closed sales

The three priciest residential sales in London for 2014 ranged in price from about $47 million to $85 million, according to London’s municipal land registry. Ironically, none of them bested the latest record breaker in New York: Extell Development’s $100 million penthouse sale at One57, which closed last month. Still, these London pads are not too shabby.

Price: $85.6 million

The apartment, which sold to an undisclosed buyer in July, is the second-most-expensive single home sale in British history, behind a mansion in West London, which went for just under 55 million pounds in 2012. The newly constructed maisonette is located in the new seven-unit development known as 5 Princes Gate in Westminster.
Price: $78.6 million

This six-bedroom, 8,400-square-foot duplex is located at 21 Chesham Place in the Royal Borough of Kensington and Chelsea. The Norman Foster-designed six-unit building, which was developed by brothers Nick and Christian Candy, is a former telephone company exchange. The unit, which was listed for about $60 million, sold (well over ask) in October. The Candys, of course, are the duo behind London’s now-famed One Hyde Park, where a multi-unit sale in 2011 topped $222 million.

Price: $47.7 million

The house, which is located at 8 Thornwood Gardens in Kensington and Chelsea, has 10 bedrooms and four “reception” rooms. It’s part of a 45-home, garden-centered development from early in the last decade with a pool and a gym. It sold in February. It last sold for $17.57 million in 2006, giving a good idea of just how much London luxury prices have jumped.

Priciest three listings

Gauging the priciest London listings is difficult because the most expensive homes are never actually publicized. “Many buyers for these most expensive properties do not want to see this imprint available on the Web, for security and privacy reasons,” said Adams of John Taylor. TRD, however, was able to find the priciest listings on England’s publicly available multiple-listing service; not surprisingly, most did not have exact addresses. Unlike the New York market, where new construction apartments are currently fetching top dollar, most of London’s priciest listings are houses.

Price: $70.4 million

The seven-bedroom house on Lyndhurst Road in London’s well-to-do Hampstead neighborhood includes four reception rooms, an indoor swimming pool and lush gardens over more than half an acre.

Price: $59.8 million

The 13,564-square-foot eight-bedroom townhouse sits just off Mayfair’s ultra-fashionable Berkeley Square on Charles Street. It comes with a two-story reception hall and traces its architectural roots to the late 1700s (though it’s been recently renovated).

Price: $51.7 million

This seven-bedroom mansion is in the neighborhood known as St. John’s Wood. It includes flourishes like a home theater (with a bar) and a “leisure complex” with gym, steam room and indoor pool.

The development darlings

Like New York’s One57 and 432 Park, London has its own buzz-worthy projects.

When it opened in 2011, the Candy brothers One Hyde Park, was the “it” project, making international headlines when Ukrainian mogul Rinat Akhmetov bought a 25,000-square-feet two-unit pied-à-terre for $222.2 million. The deal still ranks as the overall priciest residential purchase in U.K. history. But there are a slew of new projects, particularly along the currently unfashionable South Bank of the Thames River. Here’s a look at the most noteworthy among them:

The Heron

The 367-foot, 36-story tower, which opened in 2013, was the tallest residential development in the City of London neighborhood in more than 30 years. The 285-unit building includes a 6,000-square-foot duplex penthouse that features a retractable glass roof (not a skylight, a roof) and is asking $27.2 million. The tower was 97 percent sold before construction was finished.

Upcoming challenges

The London market is facing a couple of key challenges in the coming months, namely retaining its status as a go-to investment for wealthy foreigners. Below are three factors that sources say could push foreign buyers out of the market.

Higher taxes

At the end of 2014, the British government increased the sales tax on properties worth more than $2.3 million to 12 percent, up from about 5 percent two years ago. British residents refer to this as the “stamp duty” or “mansion tax.” Nearly every property trade, of whatever price point, is subject to a stamp duty; the mansion tax is for properties trading in only about the top 2 percent of the U.K. housing market — basically, the prime London market.

General election

The U.K. will host its first general election in five years on May 7. The uncertainty over who will control the national government post-election has contributed to the slight softening of the London luxury market, sources said. The Labour Party, which lost the last general election to a Conservative-Liberal coalition and has a good chance of regaining power, has proposed a new annual tax starting at $4,500 on homes worth at least $3 million. The amount of the tax would increase with the value of the home.

Stronger pound

Although a stronger pound speaks well to the British economy, it also makes it more expensive for foreigners looking to buy London real estate. In July 2014, the pound hit a six-year high against the U.S. dollar, rising above $1.70. It was around $1.50 at press time.

Source: The Real Deal