'Prime' Pads Lure Beseiged Billionaires
London -- Despite the global financial crisis -- or, because of it -- prices in the London neighborhoods of Belgravia, Chelsea, Kensington, Knightsbridge and Mayfair have risen 23 percent from their previous peak in March 2008.
Art collectors of Art Kabinett social media network are watching a similar trend in the high-end art market.
Noel de Keyzer, a veteran broker for Savills Plc, a London-based real estate agency, is pictured here in a surprisingly sunlit subterranean family room beneath the garden of 29 Brompton Square in Knightsbridge, on the market for 27.5 million pounds ($44.3 million). Damien Hirst butterfly prints hang on the earth-tone walls of the recently renovated, fully furnished 1820s house.
“I would say that eight out of 10 buyers will take a house like this lock, stock and barrel, including the contents, and do very little in terms of altering the design,” de Keyzer says.
By “a house like this,” de Keyzer means "super-prime" -- the designation given to properties asking in excess of 10 million pounds.
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.
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 policy. Wealthy French have fled President Francois Hollande’s new tax regime.
Ultra-high-net-worth individuals from the periphery of the euro zone -- Cyprus, Greece, Italy, Portugal -- have sought to shift assets out of the besieged currency and into pounds.
For Russians, de Keyzer says, “the Putin factor” -- the fear of a sudden shift in political winds -- cannot be underestimated. Russians and citizens of former Soviet republics indisputably drive the market among international buyers, says Tim Wright, a Knight Frank partner specializing in super-prime housing.
After 25 years spent selling premium real estate, de Keyzer has become increasingly attuned to the cultural idiosyncrasies of the global wealthy:
Middle Eastern buyers won’t consider houses without elevators.
Singaporeans require lots of staff accommodations.
Russians, on the other hand, have few servants and consider privacy and security paramount.
Indians like his-and-her walk-in closets.
Americans tend to window-shop, preferring to rent for tax purposes.
Burgeoning billionaires often employ 'buying agents', although De Keyzer regards these functionaries' growing ranks with ambivalence.
Some lack qualifications and neglect to tell their demanding clients about the U.K.’s restrictive rules on modifying historic properties, or that what’s being “bought” is often in fact a long-term lease from the estate of an aristocratic family, such as the Grosvenors or the Cadogans, who own much of central London.
The principals, as the buyers are known, get personally involved at some point.
Even for a billionaire, 10 million pounds can be a sizable chunk of change. The viewing, however, may not last long: De Keyzer once watched a German billionaire buy a 25 million pound house in Chelsea after a single 15-minute showing.
Some billionaires, it seems, develop sticker shock in this town. Many who begin their search saying they don’t want to do major renovations wind up taking on fixer-uppers in order to get more house for their money. (Not Russians. “Russians seem to need to move out of Russia quickly,” he says.)