13 March 2010, Financial Times
By Belinda Archer
Supremely wealthy, an Arab businessman is being shown round a mansion on The Bishops Avenue, the famous billionaire’s row in north London. It is an eye-watering property: it offers the ultimate in bespoke, knee-deep luxury, from the latest in security to lavish leisure facilities, intelligent domestic systems and, of course, a trophy location. But the businessman is not happy. The pool is not big enough and there is simply not enough space for his six staff. The sale does not go through.
This experience is being repeated around the world – even in the current economic climate – as ultra-wealthy individuals with eight-figure sums burning a hole in their designer slacks fail to find properties to suit their increasingly extravagant demands.
The trend is the result of a combination of factors, from the growth in the number of billionaires globally to the ever more extravagant demands of Russian oligarchs and Arab princes. And it is causing something of a crisis at the top end of the international real estate market; homes that might suit this demanding clientele are becoming almost impossible to find.
“With the economic downturn, the houses at the very top of the market seem to have vanished – a year ago, a £150m property in the south of France would have been easy to source but today there is very little available,” says Lucy Russell, managing director of international property search agency Quintessentially Estates. And Camilla Dell, managing partner of London buying agency Black Brick Property Solutions, adds: “There has been a phenomenal rise in the number of global millionaires and billionaires in the last decade. Russians were a big force in the London, then the south of France property market, but as a business we are now focused on India – the number of billionaires there is set to triple over the next few years and Indians have a huge affinity with the UK and want to buy property here.”
The sort of home the money-no-object purchaser is looking for can be extraordinary. One recent prospective buyer wanted a property that could display his 48ft yacht indoors. Another was intent on finding adjoining homes on the same plot: one for the parents, one for the children. A third was looking for a private tropical island where mosquitoes did not breed.
Top locations include London, which has a huge following with the super wealthy – particularly specific addresses such as Kensington Palace Gardens, the UK countryside and the south of France. All bring their own problems, however, with limited supply being the biggest drawback for London. “A consistent request is that they all want to look over Hyde Park – but there are simply not enough streets for every super-rich Arab businessman to fulfil this dream,” says Tracy Kellett, owner of BDI Home Finders, a partner organisation to the Arab British Chamber of Commerce. Roarie Scarisbrick, of upmarket buyers’ adviser Property Vision, adds: “Property Vision’s Russian, Indian and Middle Eastern departments are all busier than ever, with clients wielding anything up to £100m wanting to take advantage of the best buying conditions in a decade to buy their dream London home.”
Many country properties in the UK are also restricted by their listed status, with structural changes such as swimming pools or the rearrangement of walls not allowed, while privacy is often compromised by public rights of way and bridle paths. They are often located in areas of outstanding natural beauty or conservation areas too, further restricting the large extensions so popular with the super rich.
There is another problem with this hard-to-please sector, too. “Due to the mindset of the wealthiest, the measure of what makes the finest home looks set to keep shifting upwards,” says Jonathan Hopper, managing director of Garrington, the UK property search company.
Indeed, recent demands have included a high-vaulted panic room for a particularly security-conscious Russian client, a glass shaft lift to the garage to allow one client to admire his Ferrari more easily, and bathrooms with baths that fill at a certain time to a certain temperature, controllable by text message. Non-negotiable must-haves seem to include anything from cinemas to spas, dog washing rooms and whole plot security.
“At this level, certain features are absolutely de rigueur,” says Noel De Keyzer, head of the Savills’ Sloane Street office. “These would include full air conditioning, a full audiovisual system, a cinema, an indoor pool and a gym. An at-home hair salon is also becoming a new standard.”
A key element contributing to the fundamental imbalance between demand and supply of the finest homes is that much of what might qualify for the international super-rich purchaser never comes to the open market. Jonathan Bramwell, head of the country team at search agency Prime Purchase, says: “So much of the top end is only privately available and comes with confidentiality clauses. Billionaires have to use property search agents like us who have access to that information.” Dell adds: “Most buyers at this end of the market will shy away from over-exposed, highly marketed developments. Anything marketed simply will not be considered. Discretion and confidentiality is just as important as finding the right property.”
One solution for the mega-wealthy property hunter is to customise and refurbish lower-grade properties, or knock down and rebuild them, but these often don’t have the required trophy settings or the necessary land for a full equestrian centre or an ornamental lake. Another is for them to buy a plot of land and build homes from scratch. One Russian billionaire has spent seven years developing a 1.2m sq ft property in Menorca, Spain, complete with two private beaches, stables, a five-a-side football pitch and a chapel, but many billionaires want instant gratification and do not like to wait for builders to complete their tasks.
Ultra-luxury new builds are another solution and ambitious developers including Finchatton, Candy & Candy, Harrison Varma and the Bolt Property Group are doing their utmost to cater for this specialist clique. The downside with these is that the developments are often highly marketed, putting off many potential customers, and they also tend not to come with as much land, particularly in the UK.
“The new properties at Wentworth or St George’s Hill [both in Surrey, south-east England], for instance, just don’t have the land that the old big country homes have.” Bramwell says. So pity the poor Russian oil magnate or Indian business mogul. Who would have thought they would have property traumas like the rest of us?
Copyright The Financial Times Limited 2010.