“We’ve had offers of around 25 million pounds, but they aren’t quite high enough,” says Noel de Keyzer, a veteran broker for Savills Plc, a London-based real estate agency. We are standing in a surprisingly sunlit subterranean family room beneath the garden of 29 Brompton Square in Knightsbridge, on the market for £27.5 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 ($16 million), Bloomberg Pursuits magazine will report in its Holiday 2013 issue.
Despite the global financial crisis -- or, more accurately, 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, according to real estate brokerage Knight Frank LLP.
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.
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.
That’s the push. Here’s the pull: For any emerging-markets tycoon, a London house confers “I have arrived” status. And then there’s the prestige of a British education.
“Their kids go to Eton or Harrow,” de Keyzer says, naming the two most famous British boarding schools. “London is favored in that regard over Paris.”
Matt Griffith, an associate fellow at London’s Institute for Public Policy Research, notes another, less virtuous draw.