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Boom at the top

Sophie Brodie

Wednesday, 23rd April 2008

Sophie Brodie finds that the high end of the market is holding firm

Further down the street at The Knightsbridge, flats are still selling well for about £10 million or £3,000 per sq ft — just enough space for a footstool. Unsurprisingly, most people who pay these prices aren’t local. They are typically overseas ‘commodities’ merchants (enriched by colossal profits from record oil and gas prices) for whom taste is a foreign country.

These properties have to come with the latest mod-cons. Brian D’Arcy Clark, director at Savills, says the latest trend is for staff card-key systems so employee movement can be monitored constantly by nervous residents. Where a house meets such requirements, it sells instantaneously. One London agent says, ‘One exceptional house worth over £25 million was exchanged on in four hours.’

This sort of thing is not new. In the 1970s, Middle Eastern investors came to London to pour their oil billions into property and their wives into Harrods. Ten years ago Oriental and American money came looking for a home. Most recently, the trend has been for Russian oligarchs and Indian tycoons.

In January, a Kazakh billionaire paid £50 million for Toprak Mansion (soon dubbed Top Whack Mansion) on the Bishop’s Avenue, Barnet, breaking all previous records for modern-built houses. The new owner wants to spend another £30 million redecorating.

A former ambassadorial residence in Campden Hill Road is on the market for more than £100 million and agents swear there are buyers prepared to pay that sort of money, if not for that particular property.

At the very top end of the market, it’s as though the debt crisis never hit. But how long can it last? Indefinitely, say agents. But they said that last summer about central London. As the ‘world’s leading financial centre’, it would be shielded from a wider crash. Not so. Prices below the £7 million watermark fell 2 per cent in the last quarter of 2007, and 1.5 per cent in the first quarter of 2008.

London’s position remains under threat. Fears over non-domicile legislation may have subsided after the government caved in to pressure and dropped the more intrusive measures, but people are leaving. Greeks, who brought their shipping merchant business here to escape US tax changes, are weighing anchor. This time their parting gift is not a wooden horse but a £30 billion hole in the UK economy.