Next to St Martin-in-the-Fields — the shabby church on the edge of Trafalgar Square — there is a bronze plaque set in the chewing-gum -dotted pavement. It marks the exact centre of London, from where all distances are measured — but right now, say estate agents, it also marks the centre of the world.
Last year London overtook New York and Los Angeles in the cosmopolitan stakes, with a higher proportion of immigrants than either. American bankers chug lattes in Notting Hill, Saudi families sweep down Sloane Street and diamond-decked Russians hold court in Knightsbridge’s glitziest restaurants.
If you have money, London is the place to be and to buy. Frankfurt is dull, Paris isn’t seen as a serious place to do business and fortress-like visa tactics have made America a less popular destination.
So if fast-moving, Rolex-wearing, multinational London is the Venice of the early 21st century — with water in the form of light drizzle rather than canals — what does that mean for the property market? Agents estimate up to a third of the property in “prime London” — Kensington, Knightsbridge, Notting Hill, Holland Park and Hampstead — is now owned by non-UK nationals.
The upmarket agent Knight Frank confirms that a third of their sales — generally properties priced at more than £500,000 — are made to customers from abroad. In the very smartest streets, some agents say foreigners make up 75% of their buyers. The loftier the prices of their properties, the bigger the proportion of foreign buyers.
Tim Wright, head of Knight Frank’s Kensington office, says: “Overseas buyers and investors are a very, very important element in the market and without them it wouldn’t be as strong, buoyant and liquid as it is.”
At FPDSavills, economist Richard Donnell concurs up to a point: “I wouldn’t say they prop up the market, but they provide a large proportion of the demand.”
Donnell says that as only 22% of UK sales are over £200,000, wealthy foreigners buying big houses won’t send the national market into a tizz. At a local level, however, legions of well-heeled foreigners stumping up for the best properties can have a marked effect on house prices.
Last year, a disastrous one for London sales, prices in Kensington fell by as much as 15% — which agents put down largely to a dearth of rich Americans. Now that they are back, prices are up again. Houses and flats in Notting Hill, Kensington and Mayfair will always be expensive, of course, explains Liam Bailey, Knight Frank’s chief economist, but he adds: “Central London is more expensive because of foreign buyers. They keep prices in central areas higher than they probably would be if it was just domestic demand.”
But, say Bailey and other agents, it would be facile to sulk because a Venezuelan oil tycoon has beaten your measly offer and snapped up that flat you wanted in Holland Park. Put simply, if your capital city is worth living in, demand for property there will rise from all corners of the world, and the influx of foreign business and talent makes it all the more desirable.
Foreign buyers fall into two categories: the first are the international high-rollers. Since Greek shipping tsars set up camp in Mayfair in the Sixties, London has proved a magnet for the super-wealthy who want a safe political environment, with a favourable tax regime, and spiffy shops and restaurants. “London is a safe haven where people can put big chunks of money,” says Bailey.
The next wave of buyers, the oil-rich Saudis, came in the early Seventies. The latest invaders are the Russians, including flamboyant oligarchs Roman Abramovich and Boris Berezovsky, and lower-profile Indians, such as Lakshmi Mittal, the steel tycoon.
The second kind of foreign buyer, say agents, are the investors, who buy cheaper flats for less than £300,000 in the very latest development, then let them or sell on for a profit. Shiny glass-box developments along the Thames are proving a big draw for Irish investors, along with squads of South Africans and Hong Kong Chinese. New homes in high-tech towers — such as Falcon Wharf in Battersea — are often sold off-plan to foreign investors in the Far East before being launched here.
For much of the private-jet set, Britain outside London is largely a different country, and a rather less interesting one. But Irish investors pile into the latest blocks of flats in Liverpool, Leeds and Manchester, sometimes buying the whole lot between them.
Foreigners who live and buy property in London, and arrange their affairs carefully, can find it very tax-efficient, but, says Gary Hersham of Beauchamp Estates in Mayfair — who numbers Saudis, South Americans, Russians, Ukrainians and Croats among his clients — it’s the lifestyle in the world’s greatest city that lures the super-rich to settle here.
“London is the most cosmopolitan city on earth,” he says, on the phone from Greece. “Foreigners feel safe, and you can walk down Sloane Street and hear 25 different languages. There’s no political pressure; people can behave as they like.”
Hersham, who predicts an influx of Saudi buyers as a result of the instability in the kingdom, says: “They know their property can never be sequestered, and there’s integrity and discretion in dealings.”
London in the Noughties: a great party and a long property boom, with people coming from all over the world to join in. No wonder the houses aren’t cheap.
