{"id":3428,"date":"2019-02-04T14:22:36","date_gmt":"2019-02-04T14:22:36","guid":{"rendered":"https:\/\/bb.pixelanddot.dev\/market-update\/february-2019\/"},"modified":"2026-01-21T12:05:37","modified_gmt":"2026-01-21T12:05:37","slug":"february-2019","status":"publish","type":"market-update","link":"https:\/\/www.black-brick.com\/insights\/market-update\/february-2019\/","title":{"rendered":"February 2019"},"content":{"rendered":"<p><a id=\"one\"><\/a><img decoding=\"async\" class=\"alignnone size-full wp-image-7580\" src=\"https:\/\/www.black-brick.com\/wp-content\/uploads\/2021\/02\/market_update_web-Recovered-X.jpg\" alt=\"\" width=\"1200\" height=\"498\" \/><\/p>\n<p class=\"intro2\">Signs of a top-down recovery?<\/p>\n<p>From the peak of the market in 2014, it was at the top of the Prime Central London property where prices fell first, and fastest. Prices in Prime London have dropped by around a fifth since 2014 \u2013 and these price falls were exacerbated by changes to Stamp Duty, whose effects were most keenly felt on more expensive properties.<\/p>\n<p>Now, ongoing uncertainty around Brexit is depressing activity, with <a href=\"https:\/\/www.ft.com\/content\/12a83bc8-209a-11e9-b126-46fc3ad87c65?emailId=5c4e541e43cc5b00043fde30&amp;segmentId=2f40f9e8-c8d5-af4c-ecdd-78ad0b93926b\">figures from LonRes<\/a> showing transactions in prime London at their lowest levels for a decade.<\/p>\n<p>But those headline figures don\u2019t tell the whole story. According to Savills, the number of deals at the super-prime end of the market \u2013 for homes worth more than \u00a315 million \u2013 rose 43% in 2018 compared with 2017.<\/p>\n<p>\u201cDespite the backdrop of political uncertainty and a less welcoming tax environment, these figures are clear evidence that London remains an attractive place for a growing pool of international high net worth individuals to live and conduct business,\u201d said Lucian Cook, head of residential research at the estate agent.<\/p>\n<p>Last year saw 73 properties worth more than \u00a315 million change hands, worth a total of \u00a32 billion, compared with 51 deals worth \u00a31.4 billion in 2017. This was the highest total since 2014.<\/p>\n<p>\u201cThere is a strong case to be made that, across Prime London as a whole, the pendulum may have swung too far,\u201d says Caspar Harvard-Walls, Partner at Black Brick. \u201cOn the way down, the market was led by price falls at the top, and it\u2019s likely that the recovery will be led from the top as well.\u201d<\/p>\n<p>As noted last month, Prime Central London is looking particularly attractive to dollar-based buyers, who are benefitting from the fall in sterling since the 2016 EU referendum; combined with price declines, a dollar-based buyer would pay nearly 40% less, before changes to Stamp Duty, on a prime London property.<\/p>\n<p>And bargain hunters have certainly been busy. Last month, it emerged that billionaire Ken Griffin, founder of the $28 billion hedge fund Citadel, has paid around <a href=\"https:\/\/www.standard.co.uk\/news\/uk\/hedge-fund-tycoon-buys-95m-georgian-mansion-overlooking-buckingham-palace-in-most-expensive-uk-home-a4045111.html\">\u00a395 million for 3 Carlton Gardens in St James\u2019s<\/a> \u2013 making him a near-neighbour of the Queen. It was originally to be priced at \u00a3145 million, but more recently it has been marketed for \u00a3125 million.<\/p>\n<p>\u201cIt\u2019s a pattern we see in property in London and the wider UK,\u201d says Harvard-Walls. \u201cWhere the top end of the market leads, the rest follows. But it certainly shows that buyers of these properties are making a big commitment to London: in tax alone, a \u00a315 million property bought as a second home will cost the buyer \u00a32 million.\u201d<\/p>\n<p>&nbsp;<\/p>\n<p class=\"intro2\"><a id=\"two\"><\/a><img decoding=\"async\" class=\"alignnone size-full wp-image-7514\" src=\"https:\/\/www.black-brick.com\/wp-content\/uploads\/2021\/02\/market_update_web-story-2-1.jpg\" alt=\"\" width=\"1200\" height=\"498\" \/><\/p>\n<p class=\"intro2\">Getting your ducks in a row<\/p>\n<p>Even with the current uncertainty, a lack of supply and pent-up demand means that competition is fierce for good quality properties: once uncertainty begins to lift, that competition will intensify. For those buyers who stand poised to re-enter the market, the ability to move quickly can make the difference between taking an offer over the line \u2013 and falling at the first hurdle.<\/p>\n<p>Below, we summarise some of the key issues that prospective buyers could address before they conduct their first viewing:<\/p>\n<p><strong>Tax <\/strong>This is one of the first conversations we have with clients. Who will be buying the property? Will it be in a child\u2019s name? Will the purchase be structured through a corporate vehicle? What will the implications be for inheritance tax? Black Brick has access to leading tax advisors and lawyers who can ensure the transaction dovetails with the buyer\u2019s tax planning.<\/p>\n<p><strong>Finance <\/strong>While some of our clients are able to buy with cash, most use some sort of finance; given current low interest rates, some who can afford not to raise debt still borrow to maintain liquidity, or because debt on a property can be favourable for tax reasons. Final approval from a bank will, of course, be dependent on the particulars of the property in question, but there are \u2018onboarding\u2019 and KYC checks that banks can carry out in advance.<\/p>\n<p><strong>Legal <\/strong>Similarly, the legal process can be smoothed by instructing a lawyer ahead of time, allowing them to undertake necessary due diligence processes. <strong>\u00a0<\/strong><\/p>\n<p><strong>Representation <\/strong>The price offered for a property is the most important consideration for a seller, but it\u2019s not the only one. Vendors will look more favourably on a well-presented buyer, with professional representation, offering reassurance that the process will be well-managed and smoothly run. By working with a representative or buying agent in advance of the search, offers can be made ahead of the competition.<\/p>\n<p>None of the above doesn\u2019t mean we can\u2019t help buyers quickly jump through the necessary hoops if required, but laying the groundwork makes the process smoother, more efficient, and more likely to lead to a successful outcome.<\/p>\n<p>&nbsp;<\/p>\n<p><a id=\"three\"><\/a><img decoding=\"async\" class=\"wp-image-7562 size-full alignnone\" src=\"https:\/\/www.black-brick.com\/wp-content\/uploads\/2021\/02\/dubai-1.jpg\" alt=\"\" width=\"1055\" height=\"708\" \/><\/p>\n<p class=\"intro2\">The view from the Gulf<\/p>\n<p>Managing Partner Camilla Dell\u2019s visit to Dubai in January provided a useful reminder that, for all the uncertainty currently hobbling London\u2019s market, issues such as Brexit can appear quite parochial for buyers from other parts of the world.<\/p>\n<p>\u201cInterest in London property was the highest I have seen for the last two years,\u201d says Dell. \u201cEvery client or prospective client I met with was interested in buying, even if they already owned real estate assets in the UK.\u201d<\/p>\n<p>The reasons were two-fold: a weak local economy (and property market), and instability \u2013 or the fear of instability \u2013 in the region. \u201cThe mood in Dubai is very negative, in terms of the economy,\u201d says Dell. Residential prices fell 6.9% in 2018, and rental values dropped 7.9%, according to <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2019-01-23\/dubai-s-damac-may-invest-up-to-1-3-billion-in-london-properties\">figures from property advisory firm Cavendish Maxwell<\/a>.<\/p>\n<p>Meanwhile, the dispute with nearby Qatar has raised the spectre of political instability; this, combined with a weak economy in the region, <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2018-11-18\/a-haven-for-money-in-the-middle-east-dubai-is-losing-its-shine\">is encouraging ex-pats to pack their bags and head home<\/a>.<\/p>\n<p>London, by contrast, offers stability, says Dell \u2013 and a market where dollars go further than ever. \u201cThe feeling is that London is cheaper than it has been in years and good value and that, despite Brexit, is still a safe haven,\u201d says Dell. \u201cThe view here is, \u2018London will always be London\u2019,\u201d she adds.<\/p>\n<p>It\u2019s a view shared by Hussain Sajwani, Chairman of Dubai\u2019s Damac Properties. He revealed to <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2019-01-23\/dubai-s-damac-may-invest-up-to-1-3-billion-in-london-properties\">Bloomberg<\/a> that his company is looking to invest some \u00a31 billion into London property, and that investment would go ahead even in the event of a no-deal Brexit: \u201cIf it was a hard Brexit there will be more opportunities and we would be looking to take advantage of that,\u201d he said, speaking to Bloomberg TV from Davos.<\/p>\n<p>&nbsp;<\/p>\n<p><a id=\"four\"><\/a><img decoding=\"async\" class=\"alignnone size-full wp-image-7517\" src=\"https:\/\/www.black-brick.com\/wp-content\/uploads\/2021\/02\/market_update_web-story4.jpg\" alt=\"\" width=\"1200\" height=\"498\" \/><\/p>\n<p class=\"intro2\">It could be worse: London affordability improves<\/p>\n<p>London is routinely lambasted for the cost of its housing, typically vying with New York, Hong Kong or Monaco for the unwelcome distinction of being the most expensive city in the world to buy property.<\/p>\n<p>However, judged against another metric \u2013 affordability \u2013 the picture for London buyers is somewhat less grim. According to the <a href=\"http:\/\/www.demographia.com\/dhi2019.pdf\">15<sup>th<\/sup> edition of the Demographia International Housing Affordability Survey<\/a>, the UK is merely the 10<sup>th<\/sup> least affordable of the 91 major markets tracked. It is pipped, in order, by Hong Kong, Vancouver, Sydney, Melbourne, San Jose, Los Angeles, Auckland, San Francisco and Honolulu.<\/p>\n<p>The survey rates housing affordability using the \u201cMedian Multiple\u201d, a measure of the average house price divided by average household income. On that metric, price falls in London and rising wages last year have reduced that figure from 8.5 <a href=\"http:\/\/www.demographia.com\/dhi2018.pdf\">in the last edition<\/a> to 8.3 this year.<\/p>\n<p>However, that\u2019s still a long way off the affordability offered by Pittsburgh, Pennsylvania, where the average house is just 2.6 times the average household income.<\/p>\n<p>&nbsp;<\/p>\n<p class=\"intro1 intro2\"><em><a id=\"five\"><\/a> PrimeResi<\/em> recognition for Black Brick<\/p>\n<p><img decoding=\"async\" class=\"size-large wp-image-7522 alignnone\" src=\"https:\/\/www.black-brick.com\/wp-content\/uploads\/2021\/02\/market_update_web-PrimeResi-1024x425.jpg\" alt=\"\" width=\"1024\" height=\"425\" \/><\/p>\n<p><em>PrimeResi<\/em>, the industry publication for the UK\u2019s prime property business, has once again named Black Brick as one of the UK\u2019s leading property acquisition specialists.\u00a0Buying agents that make it onto the list are described as \u201cthe most influential, successful, respected &amp; connected prime residential property acquisition specialists in Britain. Operating right at the heart of the prime property market, but often under the radar, the best acquisition specialists will keep their clients streaks ahead of the\u00a0competition and well away from costly mistakes; indeed, buyers approaching the current market without expert representation are looking braver by the day\u201d.<\/p>\n<p>We have been ranked number four in <a href=\"https:\/\/primeresi.com\/prime-movers\/buying-agencies\/\"><em>PrimeResi\u2019s<\/em> Britain\u2019s Top 50 Buying Agencies index<\/a>. The ranking is based on independent research, including a survey of the publication\u2019s membership: \u201cThe rankings are qualitative judgements that attempt to measure recent success and business developments, quality of service, influence, innovation, and reputation within the industry; they are not based on company size or quantity of deals done,\u201d <em>PrimeResi<\/em> says.<\/p>\n<p>\u201cWe are delighted to be recognised by <em>PrimeResi<\/em> for the hard work we put in on behalf of our clients,\u201d says Dell.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p><a id=\"six\"><\/a><img decoding=\"async\" class=\"size-large wp-image-7565 alignnone\" src=\"https:\/\/www.black-brick.com\/wp-content\/uploads\/2021\/02\/Unknown-scaled.jpeg\" alt=\"\" width=\"1024\" height=\"681\" \/><\/p>\n<p class=\"intro2\">Acquisition of the month 1: Halsey House, Red Lion Square, Holborn, WC1R &#8211; \u00a31,150,000<\/p>\n<p>The attraction of London as a safe investment destination is demonstrated by our two stand-out acquisitions this month, both for a Hong Kong-based client looking to invest around \u00a32 million, and with limited knowledge of London\u2019s geography, or the best places to buy in the current market.<\/p>\n<p>We advised them to split the investment across two properties, offering diversification advantages and better rental prospects.<\/p>\n<p>The first property is a newly converted, <a href=\"https:\/\/www.black-brick.com\/expertise\/case-studies\/10-halsey-house\/\">two-bed, two-bath apartment<\/a> located on a garden square in Holborn. The property offers good potential yields, due to high demand for rental properties from students and lawyers studying and working in the area. We were able to negotiate \u00a3100,000 off the asking price, securing the property for a competitive \u00a31.15 million.<\/p>\n<p>We will be managing the properties on an ongoing basis for the client, providing an end-to-end service from purchase through to management.<\/p>\n<p><a id=\"seven\"><\/a><img decoding=\"async\" class=\"size-large wp-image-7569 alignnone\" src=\"https:\/\/www.black-brick.com\/wp-content\/uploads\/2021\/02\/Seymour-Street-1-1024x970.jpg\" alt=\"\" width=\"1024\" height=\"970\" \/><\/p>\n<p class=\"intro2\">Acquisition of the month 2:\u00a0Seymour Street, Marylebone, W1H &#8211; \u00a31,150,000<\/p>\n<p>The second property is a new-build one-bedroom flat in a block of only 27 apartments in Marylebone. The building is regarded as one of the highest quality boutique developments to have been completed recently, with all units selling off-plan. The building is finished to a very high standard, and boasts 24-hour security and underground parking.<\/p>\n<p>While the property originally sold for \u00a31.6 million, the buyer failed to complete. Through our contacts, we became aware of the opportunity to purchase at a heavily discounted rate before the property was released back on to the open market. We subsequently agreed the purchase at \u00a31.15 million, a 28% discount from the original contract price.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Signs of a top-down recovery? From the peak of the market in 2014, it was at the top of the Prime Central London property where prices fell first, and fastest. Prices in Prime London have dropped by around a fifth since 2014 \u2013 and these price falls were exacerbated by changes to Stamp Duty, whose [&hellip;]<\/p>\n","protected":false},"featured_media":3109,"template":"","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"","_relevanssi_noindex_reason":"","inline_featured_image":false,"ghostkit_customizer_options":"","ghostkit_custom_css":"","ghostkit_custom_js_head":"","ghostkit_custom_js_foot":"","ghostkit_typography":""},"tags":[],"class_list":["post-3428","market-update","type-market-update","status-publish","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO 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