17 December 2013, The Daily Telegraph
by Zoe Dare Hall. Thoughts of the coming year in the central London property market inspire a curious cocktail of optimism and fear for agents. The market is “on fire”, as Howard Elston, director of Aylesford International, puts it. Foreign buyers will continue to dominate the picture and new areas are becoming magnets for international wealth – Battersea’s vast Nine Elms regeneration area, for example, Marylebone, whose new boutique developments are breaking previous price ceilings and Mayfair, no longer Belgravia’s poor cousin.
But prime London’s market sizzles beneath an ominous shadow: the threatened Mansion Tax. Until the May 2015 election, no one can know exactly what the tax – Labour’s proposed 1 per cent annual levy on homes worth £2m or more – will mean for property values. But Trevor Abrahmsohn, director of Glentree Estates, who sells some of London’s most expensive mansions in Hampstead’s The Bishop’s Avenue, sees it in dramatic terms. “It will drive a coach and horses through the finely balanced dynamics of the residential property market, the like of which has not been seen since the Second World War.”
“Many owners of high value homes aren’t prepared to wait and take the risk, so they’re downsizing in anticipation. That’s a trend that’s likely to continue next year, with more renters likely to target the top end of the London property market as a result, says Camilla Dell, partner at Black Brick buying agency. “But non-doms will continue to flood in, despite a new capital gains tax on profits from April 2015,” she adds of the new announcement that overseas investors in UK property will have to pay tax on any profits.
Among those non doms, Chinese buyers will come to the fore in London next year, says Rachel Thompson, a partner in The Buying Solution, branching out from the new-build riverfront developments that have typically attracted them to more traditional period properties, while Middle Eastern buyers will increasingly diversify to the commercial sector.
For those with aspirations of digging deep in Kensington & Chelsea or Westminster, 2014 will be the year to do it before their local councils – who are already clamping down on mega-basement conversions – put a stop to the practice entirely.
As for areas on the up, the South Bank is “the most exciting contemporary urban quarter” and firmly on the prime central London map now, according to Savills, who predict 25 per cent growth over the next five years. New projects include South Bank Tower, an overhaul of the 1970s King’s Reach Tower, where 173 flats will launch in Spring from £650,000 through Savills and CBRE.
The South Bank’s competition will come from The Strand, soon to be rebranded “North Bank” and to become a “world class destination”, according to Ben Babington from Jackson-Stops & Staff, who are marketing the new 353 The Strand development, with apartments costing from £2.35m. Neighbouring Covent Garden and the “city fringe” are also part of the WC2 overhaul and will see buyers migrate from the likes of Mayfair.
Overseas, residency will be the buzzword in 2014. Following in Portugal’s footsteps, Spain recently launched its “golden visa” scheme, offering residency to non-EU nationals in return for at least €500,000 in Spanish property. Malta has introduced a new Global Residence Programme for non-EU nationals and similar incentives are taking off in the Caribbean, where the success of St Kitts’ citizenship programme has driven Antigua and Grenada to launch similar schemes. Barbados is also making it easier for buyers to invest by relaxing the amount of time they can stay without needing to renew their visas.
Spain will be hoping for some light at the end of the tunnel, now that it’s officially out of recession. Bill Gates has shown a vote of confidence by investing in the Spanish construction industry FCC and Ibiza’s property market is set to continue to fly next year, with British buyers back in force. “But don’t expect any bargains,” says Alex Vaughan from Lucas Fox. “For that, head to Barcelona, the Costa Brava or Marbella, whose markets have seen big price drops but are now recovering.”
Italy – whose luxury property market saw prices fall by up to 20 per cent this year, according to Linda Travella from Casa Travella estate agency – is hoping to tempt investors by reducing buying costs from January (you’ll save around €12,000 on a €1m home) and Tuscany will be the place for Italian bargains, says Paul Belcher from Ultissimo. “The large supply of luxury properties, some at distressed prices, will put the brakes on price rises for at least another year,” he says.
So, mixed fortunes await in London and incentives galore are on offer in weaker markets abroad. Where will you invest?