By Lucy Warwick-Ching

Vastu is the new feng shui – or, rather, the old one, given that some say the former inspired the latter.

… around 40 per cent of the world’s most expensive real estate is bought by Asian buyers for whom the “energy” of a house can be important – and vastu is already impacting on non-Asian design.

Water is a particularly important element of the five (earth, air, fire, water and space) that must be aligned in a home designed to fit with the principles of vastu, an ancient Hindu system of architecture and design. In return, according to vastu followers, the homeowner sleeps better, gets richer and enjoys domestic bliss.

Global developers and property consultants are also beginning to recognise vastu. “Many of our Indian clients are into vastu and so we have had to learn the principles behind it to help them with property searches,” says Camilla Dell, managing partner at Black Brick Property Solutions in London. “The critical question for us is the positioning of the front door,” she says. “If it faces south there is no point in us even showing the property to a client. South is the energy point; the belief is that if the door faces south then all the energy will flow out of the house.”

By Daniel Thomas

Buried beyond the wrought iron gates and tree-lined façades of mansions in fashionable locales of prime London lie the real gatekeepers of the ultra-wealthy: the guards hidden among the shadows; the microphones, pressure pads and sensor beams that criss-cross the gardens; and, deeper still, the concealed panels, panic rooms and vaults at the heart of the home that protect the true valuables, such as the spouse and children.

One of the appeals of London is its relative safety and financial stability but the influx of international buyers over the past two years, particularly from eastern Europe and the Middle East, has brought with it heightened security demands for some of the world’s most expensive properties, with a sharp rise in the use of ex-army bodyguards to sit alongside the high technology installed in walls and floors. Andrew Ellinas, director of independent property consultants Sandfords, says: “For very [wealthy] Russians, security has to be absolute and these clients may require bullet-proof glass, a house with two entrances and a bodyguards’ room with security cameras and monitors. One such house that we marketed had a lock-down top floor that in the event of a violent incursion could be shut off from the rest of the house. Such a set-up might cost £500,000 to adapt a house.” And that’s before staff costs. Fully secure panic rooms with independent air supplies come as standard in the world’s top residences. Technology has boosted security measures to Bond-movie levels, with gadgetry ranging from iris-recognition scanners to vehicle number-plate-recognition software.

Nick Candy, an interior designer and development manager – most recently of flats at One Hyde Park in Knightsbridge – says that recent projects include entire walls that slide in a variety of directions and angles to reveal secret vaults, panic rooms and hidden floor panels that reveal storage spaces. “We have created safes that are disguised as books and slide-away TVs that reveal Picasso paintings. We have also devised entire personalised entry systems that can sometimes include six levels of access. Not forgetting that sometimes the simplest of innovations can be the most effective and the most popular, for example artwork sensors,” he says.

Security is not the only consideration. Having the right brand and look has become important. And it matters where your security guards were trained. British army training carries the highest kudos. Camilla Dell, managing partner of Black Brick Property Solutions, says that there has been an increase in demand for security provisions among the wealthy for their homes. “As a result we are now working a lot more closely with security firms that we can introduce to our clients once we have sourced the property,” she says. “Their needs range from the basics – such as wanting a safe – through to much more complex security, such as surveillance.” London, in particular, has seen a rise in more visible deterrents for both the safety of the owners and their homes. Gated developments that boast underground or secure parking, electronic gates, surveillance cameras and security guards are in particular demand. One Hyde Park allows occupiers to park underground via a car lift, which means that they need never step outside the cosseted world of their luxury interiors.

Security advisers say that this minimises the risk of kidnapping. Dominic Grace, head of development at Savills, says: “Buyers of new-build developments get the bonus of tailoring the property to their specifications. For instance, they can choose where they want to put the safe, its size and shape and therefore where the reinforced floor will have to go.”

The Kenwood Place development in Hampstead is typical in offering state-of-the-art systems. While a digital visual intercom system operates electrical barriers and Maglock door latches, the intruder alarm linked to vibration detection devices and wireless movement detectors connect to a security terminal on the concierge’s desk. The escalating level of security can in part be traced to the typical buyers of such luxury accommodation over recent years. The market has been fuelled by the influx of buyers from eastern Europe, and in particular from Russia, where security concerns are real given the political and social upheaval. The other main group of buyers is from the Middle East. Dell says that many clients are from emerging-market countries where security is an issue, and they want to replicate measures even in major cities such as London where the risks are lower. This generally means some sort of bodyguard or chauffeur, and the UK has seen a remarkable rise in the use of such services in the past few years. The number of close-protection licences (an exam qualification recognised by the security industry) has risen three-fold in the past four years from 1,992 licences in June 2006 to 6,220 last month. London agent Gary Hersham has noticed a sharp increase in guards, particularly at the mansions along “Millionaires’ Row”, or Bishops Avenue in north London.

“I have noticed this security aspect much more frequently, particularly when the resident is from eastern Europe,” he says. He says that the majority of central London homes of more than 10,000sq ft have full security rooms that could monitor dozens of cameras, while some on Bishops Avenue and Eaton Square in Belgravia also have strongrooms and “safe haven rooms” generally well concealed behind a library bookcase or a dressing room cupboard. But the desire for security also relates to the nature of the tenure for many owners, for instance those who leave their homes empty for months, raising serious risks of burglary or even squatting should they not have people on site. It is perhaps not surprising that agents report high demand for security systems that allow owners to monitor CCTV from remote locations. One agent was even asked for a direct link-up to a yacht in the Caribbean. Heta Shah, partner of agency The Residence Collection, says: “High-end security systems are no longer an option but very much a must in prime and super-prime residences. Buyers at this level spend so much time away that they are increasingly requesting remote monitoring systems, via secure networks, to be in place.” Chris Hartley, director of Vigilance Properties, a security firm that employs ex-army guards, says house security is a growing part of the business. “We’re normally in there alongside alarms that are linked to the police. We work across west London, with homes ranging from £50m down to £5m, mainly to protect against squatters [who] have become more opportunistic and aggressive.” All owners of such properties have an interest in keeping valuables protected, of course. Trevor Abrahmsohn, a London estate agent, says that panic rooms and strong rooms to keep family heirlooms, paintings, silverware and the family jewellery now come as standard in most luxury homes. “It is becoming more and more important for homes at this level. If you don’t install such rooms and devices, then you will have a problem selling them.” He adds that some buyers of prime property want infra-red cameras both inside and outside the property, normally monitored by a security guard around the clock. Some gardens have patrol dogs, or dog noises triggered by sensor, while others are linked to a service where remote security guards greet any visitor through embedded microphones. If the required response is not provided, they call the police.

Such requirements are driven by a real fear of burglary as well as for personal safety, he adds. “The police coverage is deemed insufficient. It is not just ‘Mr Russian Oligarch’: ordinary wealthy folk also want a degree of added security.” It is not only a feature of city-centre homes. Philip Eddell, who manages Savills’ country house consultancy business, is often required to set up security audits, usually involving former special forces teams who will test every window, door and potential access point to expose weaknesses. Some owners want their homes to be swept for bugs, and there are more esoteric demands reflecting the sort of assets that can be stored at home, such as considerable collections of art or wine. That the homes of the wealthy are rarely homely is always an irony, but they are rarely without a great deal of security. Luxury comes at a cost, of course, but the price of security can be just as high.

By Faith Glasgow

Most homes are bought and sold on the open market, using an estate agent whose job it is to get as many serious viewers as possible through the door. Sellers put up with a stream of strangers – scrutinising the plaster, opening the cupboards and making comments about the decor – because they know they have to in order to achieve a sale, hopefully at a decent price.

This is not the only way, however – at least not if you inhabit the upper echelons of the housing market, where an increasing number of both buyers and sellers have powerful reasons for wanting to avoid the free-for-all of an open-market transaction.

Indeed, there is a whole spectrum of covert property deals being done, with not a glossy brochure or prestige property section advert in sight. Some transactions, according to Crispin Holborow, head of country house sales at estate agency Savills, are so secret that they sound more like gung-ho wartime operations, with codenames for the project, the seller’s identity concealed even from the sales team and confidentiality agreements required from everyone visiting the property or involved in the sale. He cites a sale in excess of £30m in 2007 in which no one but the lead agent in Savills’ country house team knew the client’s name or the estate’s location. It went through without a word of press coverage.

“I’ve made a number of advance trips to the homes of high-profile sellers before we show a buyer around, in order to take photographs of the owner down [off the walls], turn invitations on the mantelpiece around and generally conceal the evidence,” adds David Forbes, director of Savills’ private sales office.

Why such drastic measures to protect identities? Celebrities, of course, are keen to keep the paparazzi off their track for as long as possible; but Holborow says pure celebrity is rarely the primary reason for wanting to keep a sale quiet and, indeed, that in most cases it is the stars themselves who are responsible for leaks about a transaction. “No, it’s usually because of the house staff – owners don’t want the staff to hear rumours or be anxious or disrupted; they’d rather present the sale as a fait accompli,” he explains.

Tom Hudson of country buying agent Middleton Advisors concurs. “We see great value in discretion and vendors tend to agree. One client recently bought an estate in Hampshire that took two years to complete but no one else knew during that time. The seller had lots of staff and interests in the area, so total confidentiality was needed.”

Other sellers want to avoid any damaging links being made between their business and the sale of their home. As Jonathan Bramwell of buying agent Prime Purchase explains: “For a high-profile businessman there are risks that an open sale could lead to rumours in the City [of London]. Are they moving offshore? Is the business in trouble?”

In many cases, Forbes says, the desire for secrecy is basically to do with changing personal circumstances: “People may be selling because they’re getting divorced or they’ve lost their job or lost a lot of money or become ill – but they don’t want their friends, colleagues or neighbours to know what’s going on,” he explains. Safety can also be an issue: rich people might fear for their own security or that of possessions.

Buyers at this level can be equally cagey – often for much the same reasons as sellers – which is where the buying agent’s intermediary role comes in handy. The wealthy people, celebrities and even royalty with whom Camilla Dell of London buying agent Black Brick Property Solutions deals want their identity protected as a matter of course. “Many are not British and are using an offshore company for tax reasons, rather than buying in their own name, so we can do the whole transaction without the buyer’s name being used,” she adds.

Forbes believes that this trend towards private transactions has gathered momentum over the past four or five years, as sellers and buyers alike attempt to keep their financial affairs under wraps in the face of increasing reams of information in the public domain, a growing culture of celebrity and a more intrusive press. It is also a reflection of straitened economic times. Forbes says: “Two or three years ago there was a lot of money around; people – Russians, Indians, new money – wanted to leave the price-tag on their properties and they wanted their names attached. But that’s gone now. There were big bonuses for some hedge fund managers and other City workers but they won’t want people to know they’ve bought new property, nor how much they paid.”

A similar trend is evident, albeit on a smaller scale, in New York. Private sales there only really occur among very top-end properties (over $20m), as less expensive properties “need to reach a broader market to achieve a sale”, says Kirk Henckels of Stribling Private Brokerage (which caters for the $5m-plus market). But while the number of top-end sales in New York has shrunk dramatically since the financial crisis, “quiet” transactions have become more significant, with the growth of what are known as “pocket listings”, held back from the communal pool of listings to which all real estate brokers have access. “After the crisis, trophy spending became politically incorrect. It simply wasn’t acceptable any more to go to a cocktail party and say you’d bought a $30m apartment,” says Henckels.

While very wealthy buyers and sellers might go to great lengths to protect their identities, at the next price bracket down many sellers take a less extreme tack, in effect still working within the market but attempting to tap into latent demand without having to go to the expense of an advertising campaign or brochure. In these quiet sales agents are given a limited period of time – perhaps a month – to put the word out to specific potential buyers, either directly or through buyer’s agents. Or, on occasion, a seller might simply let it be known that although the property is not for sale he or she is open to private proposals. If no deal is reached privately and the seller is keen to move on, the property can later be released on the open market.

“With properties worth up to £2m, almost everything goes to the open market,” says Hudson of the UK country market. “Above £5m there’s a 95 per cent chance it will be put out to buyers quietly first.” Holborow suggests almost half of all country house properties (especially the more expensive ones) are being sold privately, with an average value of about £8.5m.

It is often a preferable solution in several respects. Not only is it cheaper in terms of agent fees and more civilised than the open-house regime required in the mainstream market but sellers might be able to ask a better price. As Dell explains: “Properties offered off-market tend to have an aura of exclusivity and so some sellers are choosing not to go to the open market purely so as to create a ‘buzz’ around their home.” That whiff of rarity value might enable them to ask a premium over the asking price in the open market. If they get it right, eager buyers will pay the premium to secure the right property without having to get into competition.

They don’t, however, always get it right. “Often private sellers ask too much,” growls Hudson.

Discreet deals are likely to be a feature of any property market catering to wealthy individuals. For example, Jonathan Grey, who runs Beechams Estates’ office in the south of France, says: “Most deals exceeding €15m are very secret; below that level many people use discretion but as a sales strategy rather than to avoid public exposure. They don’t want to advertise – they would rather promote their property by word of mouth because that makes it into something special.

“That’s particularly the case because the open market in the south of France is dominated by multi-agency instructions, which means you are likely to see the same property on one list after another and people just lose interest in those properties.”

Ultimately, exclusivity and desirability are closely linked, agrees Bramwell. “Sellers see the private market as an opportunity to quote a premium price, particularly if they don’t need to sell but would do so at the right price. It’s pointless to launch publicly because of the risk that the house might stick and go stale; and the right buyer will understand that they may need to pay a premium for access to a best-in-class property.”

SALES MANOEUVRES: QUIET EXPERTISE

Selling:

• For properties worth less than £2m don’t bother – you will do better in the open market.
• “Do not try to sell privately without a selling agent, as the chances of getting it right are slim,” says Tom Hudson of Middleton Advisors.
• Most high-quality agents will be happy to sell quietly if you explain what you want.
• In the UK, you need to have a Home Information Pack in place, even if you don’t go to the open market.
• Be clear on the level at which you are prepared to strike a deal. “If you decide your house is worth £3.75m-£4m and the first private viewer offers £4m, then you can’t ask for more because this isn’t the open market,” says Hudson.

Buying:

• Talk directly to top-end agents about what you are looking for.
• This is a business built entirely on networks. Jonathan Grey reports that intermediaries such as lawyers and notaries are among his most important sources for both buyers and sellers – so make sure your advisers have their feelers out on your behalf.
• Buying agents are probably the surest way to access the trickle of off-market properties available or coming up in chronically under-supplied areas such as the UK country-house market. They are also likely to know the best examples in city markets such as London, where there is generally greater supply of privately marketed property.

 

Copyright The Financial Times Limited 2010.

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.

By Faith Glasgow

The dramatic slide of sterling against the euro and other currencies since the start of last year has created big winners and big losers in the world of residential property. In the former category are international buyers in the UK, and especially in London, who are combining falling prices with improved exchange rates to secure deals that cost them 40-50 per cent less in their own currencies than they would have a year ago. In the latter are British buyers abroad, who can no longer afford the gîtes and haciendas they once coveted or have found themselves struggling to cover the monthly payments on their foreign-currency-based mortgages.

Sammy Abd Kerim, an Egyptian businessman based in Cairo, is among the fortunate ones. He started looking for a London apartment in the summer of 2007 through estate agency Kay & Co and quickly found an ideal three-bedroom property on the third floor of a grand block overlooking Hyde Park. “I come to [the city] four or five times a year so I felt it would be good to have a base where I could stay and bring my family,” he explains.

He offered £2.1m for the flat, slightly below the asking price of £2.35m, but London’s prime market was still bubbling at the time and the seller rejected it. “I walked away at the time and continued to look around,” Abd Kerim says, “but in autumn last year the sellers reduced it to £2.1m and we picked up our discussion. Now I am expecting to pay £1.9m, which amounts to a reduction of almost 20 per cent on the original asking price.” Even more importantly, since the Egyptian pound gained 26 per cent against sterling in 2008, he saved another £500,000.

He acknowledges that the flat’s value might fall further over the next few months but still thinks now is the right time to buy. The market “may lose another 5 per cent but no more and prices will rise again in due course”, he says. “I don’t feel the need to wait longer. Even if the market falls another 10 per cent, I have saved a great deal of money on the currency exchange. In fact, I am thinking of using it to invest in a second flat to rent out, as a bonus.”

Estate agents in the UK say such attitudes are increasingly common and are now resting their hopes on buyers like Abd Kerim to kick-start sales. They expect the most interest to be in areas and segments of the London market that have been hit hardest by City redundancies, including Kensington, Notting Hill and Holland Park (where Savills says prices fell more than 11 per cent in the past quarter) and in the £1m-£2.5m price range (where Knight Frank estimates average declines at 22 per cent since the peak). They say there is rising interest not only from the Middle East – with buyer numbers up 70 per cent from the end of 2007 to the end of last year, according to Knight Frank – but also from Europe, since the euro gained 30 per cent against sterling in 2008; the US, with the dollar up a relative 35 per cent; and Asia, with the yen up 66 per cent.

“People who stopped looking in 2007 because prices were ludicrous are returning,” says Martin Bikhit at Kay & Co. “Even our toughest, pickiest clients are now seriously looking around because they recognise this is a limited window of opportunity. Two years ago only 20 per cent of our work came from international buyers; now I guess they account for 80 per cent.”

Camilla Dell at property search agency Black Brick confirms the trend. “We’re seeing a big increase in Middle Eastern, African and other dollar-linked buyers, who are now showing strong renewed interest in the London market as a great investment opportunity,” she says.

Commentary from Julian Sedgwick at Jones Lang LaSalle highlights an influx of south-east Asians trying to take advantage of “a clear competitive buying advantage” – with “one particular high-net-worth family in Singapore already [allocating] just over £100m to invest in London prime residential and commercial property over the next 12 months” – while Charlie Parkin at Aylesford has noticed a surge in interest from Italians, thanks to euro strength and extensive coverage of the UK capital’s suddenly affordable homes in their local press. “Unlike some other Europeans, they also really like investing in real estate,” he adds. “They consider it to be safer than the stock market.”

Buying agent Charles McDowell of McDowell Properties says he’s also working with “three or four” European clients who “now regard London as the place to be, since they can buy in effect at half price compared to 18 months ago” and with two Americans who “feel the same”. In the latter category is John Wilson, who is relocating from Los Angeles to run a finance company and now looking for a place to live in Chelsea and Kensington. “We are now more inclined to buy rather than rent but we are cautious on price,” says his wife, Mary Lou. “We don’t want to be caught out as we were in the 1980s in California, where values dropped by 60 per cent and took 10 years to recover.”

Indeed, most international buyers are looking for deep discounts. But their presence is nonetheless good for British sellers who intend to buy into the same depressed market and, eventually, it will benefit British buyers as deal-flow picks up and spreads. “The start of the recovery may well be driven by [these] investments,” says Savills’ research director, Yolande Barnes. The precedent is 1993, when, after a disastrous year for sterling, Middle Eastern, European and American buyers revived a collapsed London market.

Meanwhile, at the other end of the widening currency divide are Britons with holiday homes and mortgages abroad. Take Anne Parry, director of a regional PR company in the UK, and her business partner, Edward Carter, who in 2006 bought a two-bedroom apartment in the Vilamoura resort in Portugal’s Algarve region. They paid €266,000, plus the cost of a fit-out, and covered about 60 per cent of it with an interest-only mortgage from a Portuguese bank.

Unlike elsewhere in Europe, the resort has not yet seen property price depreciation, with similar apartments recently selling for €330,000. As a result, Parry, who uses the property herself a few times a year, and Carter still believe in their investment. “It’s in a great location, with two of the best beaches in Europe and seven championship golf courses nearby, and [it] will gain value when the nearby marina development is extended,” she says. “Over the long term we’re not losing because the property is valued in euros and so has gained value in sterling terms,” he adds.

But they acknowledge that the currency swing has caused them headaches. “We are only paying 3 per cent [on our mortgage] but when we started we were getting €1.45 to the pound and now we’re getting around €1.06, so it’s costing us 27 per cent more to service,” Parry says. Plus, the economic crisis has also made securing holiday rental income more difficult. “We aim to cover our mortgage interest and outgoings through letting but we’re really having to be very proactive about marketing at present.”

There have been a few holidaymakers from Ireland and Portugal, who pay in euros, but most are sterling-paying Britons, whose money has to be converted back to euros before the bills can be paid. To make matters worse, as with buyers in the UK, everyone is looking for a bargain. In order to stay competitive, Parry admits, “we’re not setting the rent to reflect our full increased costs”.

Still, the pair are sticking to a long-term view. “We’ll hold [the apartment] at least until the marina development is complete,” Carter says. “I think sterling will strengthen in due course so this is a low period and we’re looking beyond that.”

Currency exchange companies such as Caxton FX and FairFX report that many British homeowners in Europe are less sanguine, however. Some who never intended to let their condos and villas are now doing so as a way to offset costs, while others are selling up, trying to take advantage of the euro’s strength, particularly if the economic downturn has not yet pulled their property values below the levels at which they bought. For example, one Caxton client bought a house in France with cash in 2002 when £1 was worth €1.62, then sold last autumn, when the ratio was £1 to €1.12. His gain on the sterling purchase price was £140,000, with more than £100,000 coming from the currency trade.

If that is one silver lining to the euro’s strength, another is that European developers are also now offering “generous discounts” to sterling buyers, says James Hickman of Caxton FX. “Others have introduced a scheme where buyers pay a small deposit but then defer the rest of the payment for up to five years and pay only interest on it meanwhile,” he says.

Julian Cunningham of estate agency Knight Frank confirms that such “solutions” are increasingly common. “It depends on the developer’s situation but typically at least 75 per cent [of the purchase cost] is postponed,” he says. “That gives buyers time to plan their finances. It’s not a new initiative but now it’s a key element of any deal.”

Buyers eager to bag a holiday home bargain while European markets remain depressed are also getting creative themselves. “A couple of recent British purchases have gone through where, instead of converting their pounds at an unfavourable rate, the buyers opened a sterling interest-bearing deposit account with a Spanish bank,” says Barbara Wood of The Property Finders in Spain. “Against this, they took out a personal loan in euros to pay the sellers. The difference between the interest earned on the sterling deposit and the interest on the loan costs them about 1 per cent. But they can wait until sterling recovers and then convert their funds and pay off the loan…”

In the end, second home purchases abroad are lifestyle decisions as much as investments. Culture-hungry jet-setters tend to crave pieds-à-terre in London whatever the cost, while Britons keen on warm-weather sailing, golfing and surfing will always dream of their own places in the sun. But until prospective buyers engage in substantial and prescient hedging – locking in attractive exchange rates through forward contracts – currency swings like the ones we saw last year will continue to have dramatic fall-out around the world.

By Catherine Moye

OVERSEAS INTEREST IN BRITISH SCHOOLING IS FUELLING THE DEMAND FOR HOUSES IN PRIME AREAS, writes Catherine Moye

Like Oxford’s spires, British fee-paying schools evoke notions of educational perfection. For many affluent non-Britons, names such as Eton and Harrow share a pedigree with buildings such as Buckingham Palace and St Paul’s cathedral: traditional British institutions that cannot be out-sourced to China.

Thus many overseas parents move to the UK, be it as non-domiciled aliens or relocators, as buyers or renters, full or part-time. Their search for British schooling for their children helps fuel demand for housing in prime areas, especially in London.

“Business, tax and education are the main reasons that overseas nationals come to live in London,” says Richard Sharples of buying agency Property Vision. “The perception is that the British [education] system is the finest in the world and most people think it’s a good idea for their children to learn English. There’s also an element of prestige in having your child go to Harrow or wherever.”

That might be the case but securing your child a place at Britain’s most venerable scholastic institutions can be like obtaining a seat at King Arthur’s round table – especially for an overseas national. Pressure on places is tough and growing and only a lucky few are admitted.

“We get hundreds of overseas enquiries. I would say that number has more than doubled in the past three years,” says Kirsty Shanahan, communications manager of Harrow school, where fees are approximately £26,500 a year. “The bulk of the increase is from the emerging economies of India, Russia and China.”

Yet only about 10 per cent of Harrow’s pupils are from outside the UK, according to Shanahan. “That’s been fairly consistent throughout. It’s not set in stone but we do keep one eye on the quota, otherwise it’s not good for the school as a whole.”

Historically the overseas clientele were wealthy parents from Asia, the Middle East and commonwealth African countries. They sent their children to British public schools that they had almost invariably attended themselves before going on to the universities of Oxford or Cambridge. (In Britain, in one of those quirks apparently designed to fox foreigners, independently run, fee-charging schools are termed “public” because historically pupils were gathered in public to be taught rather than privately at home by a tutor).

“To a certain extent it’s snob value and the fact that children are worked much harder in the English publics school system than, say, the American system,” says buying agent Robert Bailey, many of whose clients want second homes for education related reasons. “That is, the American system is more sports-led and a lot less arduous academically. We are very results-orientated.”

The attraction of a British boarding school is also perhaps an unconscious backlash against the globalised era of You Tube, the IPod and the other relentless technology assailing children. The public school boarding house is seen as a bastion of discipline and offers the original and unsurpassable version of social websites such as Facebook and Bebo: the old school tie network. Not that all parents are up to speed with the protocol. “I am constantly being asked if I can try and pull a few strings and, you know, offer a school a sizeable ‘donation’,” says Bailey.

Education consultant Martin Humphrys says he has never been so inundated with requests for schools and has witnessed a marked increase in interest from emerging countries, especially Russia and China.

”The demand for places is very high at the moment,” says Humphrys. “We’ve been in that situation for about the past nine years.” But if overseas parents’ dreams for their children are somehow bound up with the public school system, Humphrys reckons that 99 per cent of his job is about managing their expectations.

“Places are at a premium in the key schools such as Eton and the entrance exams are incredibly tough for children whose first language isn’t English,” he explains. “And there are certain schools that, if parents haven’t registered their child by the age of 10 and a half they’re not going to get them in at 13.”

Even if the star names are over-subscribed, Humphrys is firm in his conviction that British public schools offer the best education in the world. “London especially has excellent schools, from nurseries right through to senior schools,” he says. “People come here because you will not find schools bettered anywhere.”

Although there are no specific statistics on how many overseas nationals relocate to the UK to buy second homes, many parents will want somewhere in the capital for family get-togethers, especially during boarding school holidays. To that extent their housing needs are more prêt-a-porter than couture.

“These buyers are looking for easy maintenance, lock-up-and-leave apartments that are secure, with 24-hour porterage,” says Camilla Dell of buying agents Black Brick Property Solutions. “They want them in safe areas such as St John’s Wood or Knightsbridge for when the children reach 16 or 17 and stay there by themselves, and that are good for public transport.”

But matching the right child to the right school often means looking outside London.

“The most important thing is that the school is a genuine boarding school and not dominated by flexi or weekly boarders with just a trickle of overseas children left at the weekends,” says Catherine Stoker, director of education and guardianship services at educational consultancy Gabbitas. To that end, schools such as Marlborough and Haileybury in Hertfordshire and Uppingham in Rutland are popular choices.

Berkshire schools close to Heathrow airport are also popular choices for overseas parents with children returning home at the end of each term – notably Bradfield College, Wellington College, and St George’s at Ascot. And different nationalities have their own reasons for being often drawn to particular parts of the UK.

“In Tokyo they tend to live in apartments the size of postage stamps and so they love going to boarding schools set in large historical buildings,” says Stoker. “We just took a Japanese girl to see Gordonstoun [in Scotland] and she loved it.”

That blue-chip schools attract great wealth and prestige to the nation is music to the ears of Tony Little, head master of Eton College. “Ours is very much a British school and we are already over-subscribed from our British market. We don’t actually have figures for nationality but the figure that springs to mind is about 100 boys [from overseas] out of 1,300,” he says.

“UK independent schools have the strongest track record of any sector anywhere,” he explains. “When you speak to people in, say, Russia or China, what they admire most is our great tradition of liberal education.”

By this Little means that it is holistic and centred upon the person. “The Chinese, for example, are very conscious of the fact that they are strong in theoretical ‘Confucian-style’ education but the British system has the X-factor of building students’ confidence and practical abilities in the wider world.”

London also has highly regarded international schools serving the needs of foreign families, especially those relocating for short periods. Notable examples include the French Lycée in Kensington, Marymount in Kingston upon Thames, Woodside Park in Frien Barnet and Egham International in Surrey, all of which operate the International Baccalaureate system.

Those of us who live in the St John’s Wood district of north London can be in no doubt as to the knock-on effect that a prestigious school can have on an area. The American School, which has existed in various incarnations since 1969, is one of the principal drivers in the local economy. Its presence is felt in everything from the cost of quality housing to the lengths of the queues at Starbucks.

Americans are the dominant group in relocating to London. “[They] represent a large percentage of our sales and lettings, “says James Simpson of estate agency Knight Frank’s St. John’s Wood office. “Most Americans rent but we also get investors looking to buy to rent to American families. Principally they want detached five-bedroom Victorian homes in side streets.”

Greek-board Alicia Cornelius and her husband, Alex, a banker, divide their time between New York, Athens and London, where their 14-year old daughter is at boarding school. “We have a two-bedroom flat in a new-build block overlooking the river that just takes care of itself,” says Cornelius.

Her own upbringing as much as her regard for the British school system came into play when deciding upon her daughter’s education. “My parents were diplomats, so I went to at least a dozen schools around the world,” she says. “I meet a lot of people today who went through the same and want nothing more than to settle their children in one place throughout their schooling.”

Naomi Heaton of property investors London Central Portfolio, finds that mapping out your child’s educational needs is not so different to mapping out an investment plan. “In both cases you are looking at around an eight-year cycle,” she observes. “Your child is likely to be here at school or college for eight years and we see that time as the normal doubling of the London (market) cycle. In my experience, buying for the children is just a good rationale for something that people were going to do anyway.”

“Women are now arguably being paid as much as or more than men in the professional world. Successful female bankers, hedge fund managers and saleswomen – particularly women in property – are creating a new single woman status, “says Camilla Dell of London based Black Brick Property Solutions a home search firm. She first noticed single women making their mark on the market about five years ago and says that increasingly they are looking for the “same things as men – a cool pad with space where they can entertain their friends and have dinner parties.” Why? The answer is simple. “Women are staying single for longer and are empowered to buy on their own and own the ultimate female bachelor pad”. Says Dell

Dell agrees that security is definitely more of a female issue. “We don’t often get men asking about it.” She says “Women are more likely to want to be in the centre (of town) and somewhere that feels like a safe location and they are led a lot by friends. They are also more likely to want to be on the second or third floor.”

Where women do tend to be different from men is in the emotional attachments they form with their homes, both in terms of work and investment “Women are not afraid to buy properties in need of work,” says Dell. “if a property is in need of a little light refurbishment, women are much more likely to take this on and see it as a way of making their mark on a property than men, who are more inclined to buy a finished product that they move straight into.”