Prices Start at $80 Million

18 November 2013, The Wall Street Journal

London Now Has More Homes on the Real-Estate Market Listed for £50 Million or More, Topping All Previous Price Records

Cambridge House: This home is located in Mayfair and is currently being renovated. It is listed for $402 million.

London is making history once again, this time in the realm of real estate: The capital now has more homes on the market listed for £50 million or more than at any other time on record, according to one new study. That’s $80 million for those across the pond.

According to real-estate agency Huntly Hooper, roughly $27 billion in property is on the market in prime central London, of which 14 apartments and houses are priced between $80 million and $400 million. But since at this exceptionally rarefied end of the market most of the action goes on behind closed doors, the true number is certain to be far greater.

Peter Wetherell, managing director of real-estate agents Wetherell, attributes this “exponential growth” to the financial buying power of the world’s wealthiest 5%. “They have been able to buy assets and companies at discount prices and then benefit dramatically as the global market has recovered,” Mr. Wetherell said. “These global multimillionaires and billionaires see the prime central London market as an island of stability in a turbulent world.”

David Adams, managing director of John Taylor estate agents, sells London homes priced between $3 million and $325 million. He believes homes at £50m-plus are usually clustered in three key districts: Belgravia, Knightsbridge and Mayfair.

Homes in parts of Kensington and the odd prime street in north London—namely The Bishops Avenue in Hampstead and Avenue Road in St. John’s Wood—can also command this kind of price. And a few of the larger properties around One Hyde Park in Knightsbridge and Cornwall Terrace in Regent’s Park, are selling for £50 million-plus.

The most noteworthy example came in 2011 when Ukrainian oligarch Rinat Akhmetov spent £136.4 million ($218.2 million) on a 25,000-square-foot apartment in One Hyde Park.

Mr. Wetherell divides top buyers into four categories. First are the “oil royals” from Qatar, Kuwait, Abu Dhabi, Saudi Arabia and Brunei. For example, Sheik Hamad bin Khalifa Al Thani, the emir of Qatar, acquired an office building in Mayfair in 2006 and then spent six years remodeling it into a $321 million mansion with 17 bedrooms and 14 reception rooms.

Pricey High Rise: In 2011, Ukranian oligarch Rinat Akhmetov spent about $281.2 million on an apartment in One Hyde Park, located in Knightsbridge. Bloomberg News

Other big players are tycoons from Russia and Kazakhstan, among other countries. Len Blavatnik, the Russian-born property and music mogul, owner of Parlophone Records, is restoring a home on Kensington Palace Gardens that is also said to be valued at $321 million. Neighbors on the street, which backs on to Kensington Palace, include Britain’s richest man, the steel magnate Lakshmi Mittal, who bought his house for $92 million back in 2004, and Jon Hunt, founder of Foxtons FOXT.LN 0.00% estate agents. Mr. Hunt paid about $25 million when he bought the property in 2005, but a renovation and rising values have put him in the $80-million-plus club.

Ultraprime developers like Candy & Candy, the team behind One Hyde Park, and Finchatton are also playing a big role. Last year, for example, Christian Candy spent $120 million on Gordon House, a historic but rundown property in Chelsea that he plans to develop and modernize. When complete, the property, which also includes two adjacent buildings, could be valued at as much as $321 million.

The house will have everything from a china room to a tea lounge, plus four bedrooms and a master suite with his and hers bathrooms and dressing rooms. There will also be two staff / guesthouses and a basement leisure suite featuring a swimming pool, media room, bowling alley, dance studio, two treatment rooms and a wine cellar.

Spanish developer Rafael Serrano spent a reported $96 million for a long-term lease on Admiralty Arch last year and intends to turn it into a 100-guest room hotel and private-member club, with a single three-story apartment. Owned by the government, the arch is one of London’s most historic landmarks, less than a mile from Buckingham Palace. (The Duke and Duchess of Cambridge’s carriage passed beneath the arch as they left their wedding.)

Early plans indicate the apartment will measure 16,856 square feet—some 34 times the average size of a one-bedroom apartment in London, according to figures provided by the Royal Institution of British Architects. And if prices paid at One Hyde Park are a guide, the property could be worth well over $192 million when it is finished.

When it comes to design, there is no limit to luxury. Health spas, movie theaters, beauty salons and swimming pools are all fairly standard in homes in this price range. The Formula One heiress Tamara Ecclestone created a spa for her dogs (plus a bowling alley) beneath her home in Kensington, which she bought for $72 million and enlarged. Earlier this year a $112 million home in Eaton Square, Belgravia, went on sale complete with a gold-plated swimming pool.

Developer Christian Candy spent $120 million last year on Gordon House in Chelsea. Jeff Gilbert/The Telegraph

Also on the market is a Palladian mansion in Mayfair that is named for its most celebrated owner, the Duke of Cambridge, the seventh son of King George III. It is being restored and, when complete, will have 48 rooms in 60,600 square feet. Features include a 35,000 bottle wine cellar and underground leisure complex. Estate agent Savills SVS.LN -0.08% is listing the property for $402 million.

All of these sumptuous homes are being created and sold despite growing pressure from the British government on the very top end of the property market.

Homes that back up to Kensington Palace, shown here, are among the priciest in London. Associated Press

In 2012 stamp duty rates were increased from 5% to 7% for homes sold at more than £2m ($3.2 million). But Mr. Adams says buyers have not appeared fazed by the prospect of paying a $5.6 million tax bill on a home at $80 million. After the British elections in 2015, there is a real possibility an annual “mansion tax” will be introduced on upper echelon homes. This has also failed to dampen the buying enthusiasm of the super wealthy.

Indeed many seem more interested in protecting their privacy than their tax liabilities. Also in 2012, the government increased stamp duty for people buying property through a company entity to 15%. “The government believes people buy through a company in order to evade taxes,” explained Mr. Adams. “In fact many do so for privacy reasons.”

The only impact of new tax rules that Mr. Adams has seen is that it is reducing supply at this end of the market, because some sellers—once they have added up their stamp-duty bills plus agents’ sales commissions of about 2% and the cost of moving—have decided it is not viable for them to sell up.

Despite this, Camilla Dell, managing partner of buying agency Black Brick, believes that in the long run, £50 million-plus homes will become even more commonplace in the British capital: “Property worth more than £50 million is no longer really seen as a “huge” price in the prime central London property market,” she said. “There are now a number of developments where £50 million is perfectly normal, and indeed many apartments are priced much higher than this.”

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