In October, there were no significant changes in the premium class real estate market of the British capital. As noted by the specialists, for many buyers this is a signal for active actions after a long period of high competition in this segment in previous months. However, the sellers are not ready to bring the prices down despite the decrease in the number of deals in October.
For the last 5 years the number of real estate sale and purchase transactions in the range between £2 mln and £5 mln has increased by 20,9%, in the range of more than £5 mln – by 19,6%, however the number of sales of properties at the cost of less than £2 mln decreased by 2%. It is necessary to mention the fact that transactions made at the construction stage are not recorded in the Land register until the commissioning. Thus, a record property value was registered in Mayfair. In the new lux class complex, the construction of which has just begun, there were 18 apartments sold at the average cost of around £9, 5 mln. In May 2013 the average property value in London crossed the threshold of half a million pounds. After 18 “hot” months in the London real estate market, the figure for the first time exceeded £600,000.
Currently the most active buyers come from the African countries – Nigeria, Ghana, Congo, Gabon, Cameroon and Senegal. The media pays much attention to this fact, saying that “the African lion started to growl louder than the Russian bear”. Despite the fact that only 1,5% of the ultra-premium real estate market transactions fall on the buyers from the African countries, they are undoubtedly leaders with regard to the costs of the purchased property. As a rule, buyers of this segment spend from £15 mln to £25 mln on the London houses and apartments. For the past 3 years the biggest amount was spent by the buyers from Nigeria – £250 mln, while the average annual salary in Nigeria is £850. 80% of people from the West Africa purchase property at the cost between £15 mln and £25 mln, 10% – at the cost of more than £30 mln.
Interviews of Mayor of London concerning the real estate market are always being talked over. Thus, recently Boris Johnson protected the foreign buyers of the London property and called the opponents of the foreign capital “xenophobic commentators from the left wing” who want to fight the foreign investments with “the pitchfork”. He also called the opponents of the foreign buyers illogical, but he admitted that there is a social injustice in the fact that London citizens cannot afford to buy property close to the place of their work.
In anticipation of the 2015 elections in Great Britain one of the election pledges to introduce an additional tax, the so-called “mansion tax” is being actively discussed. Currently there are debates regarding the property cost threshold subject to this tax.
Taking into account the price increase and the fact that the appraisal is a subjective opinion of a specialist, undoubtedly, there may appear cases of disputing the appraiser’s report, and besides the cost of the appraiser’s work thousands of owners will also have to cover the cost of processing the disputable appraisals.
Forecast of the specialists for the next 5 years vary, however, everybody agrees that the prices for the London real estate will continue to grow. Some specialists talk about the 30% growth due to the possible interest rate increase and the new tax, others talk about an extreme shortage of the living objects in the capital and 1 mln population growth by 2024.
London has become the most expensive city for the salaried employees for the first time leaving Hong Kong behind, but is still the most popular city for the employment in the world. The British capital occupies the second place in the list of the world best cities for the entertainment according to the analysis of the biggest web sites for travelers.
The development of the new complexes in London is limited by not only the strict construction regulation but also by the fact that there is already a dense development in the capital. Few people have heard about the “protected perspective” in London. The law prohibits the interruption of the view on certain tourist attractions and historical buildings from the certain points of London.
Thus, for example, in the biggest royal park, the Richmond Park, famous for its deers and roe deers freely walking around the park, there is a height from which one can see the famous St Paul’s Cathedral through the thick tree branches. It is worth mentioning that the distance between this point and the cathedral is 15 km and one of the most famous places of interest of the British capital can be distinguished only by a person with an excellent sense of vision.
The law prohibiting the development without a previously obtained permission was adopted in 1947 during the office of the 62nd prime minister of Great Britain Clement Attlee. The resolution implied that almost all buildings will be constructed by the government, the opportunity of the private development became strictly limited. Besides, it was also implied that big cities would be surrounded by the green areas, where any construction is almost impossible. Further on Margaret Thatcher changed the rules of construction by autonomies, which gave more opportunities for the private developers. However, the prohibition of the construction in the green areas remained unchanged. Probably, this is why according to statistics in Great Britain the average floor space of new houses is one of the smallest in the world.
From 186 embassies situated in the capital of Great Britain the most expensive is, not surprisingly, the embassy of the USA, which is in the process of construction, and the cost of which will be around £600 mln. “The old” building was sold for £500 mln. The total evaluated cost of all embassies in London is around £4 bln. The lowest evaluated cost of £750 000 is the cost of the embassy of the North Korea being one of the few situated outside the central London. The embassy of Russia is renting a building near the Government of Great Britain. Despite the fact that it is situated in one of the most expensive streets of the world, the rent rate is only £1 per year.
This became possible due to the agreements concluded in 1991, at that the rent of the embassy building in Moscow costs Great Britain 1 ruble. It is considered that the richer the country the more expensive building is occupied by its embassy. Mostly this is the case – USA, Canada, Saudi Arabia, Australia, Japan have the embassies of evaluated cost of more than £100 mln. However, for example, Malta with GDP of around £6 bln owns a building in the famous Piccadilly street priced at around £20 mln. The approximate price of the embassy of the Kingdom Lesotho with the floor space of a little more than 30 thousand sq. m and GDP of around £1,5 bln is £5 mln.
One of the most famous skyscrapers in the world – the London Mary Axe (known as the “cucumber” due to its shape) was sold for more than £700 mln. The building is known not only for its unusual shape but also for the fact that its energy consumption is almost 2 times less than that of the similar projects. Recently one of the biggest and most expensive office buildings of London was also sold – the headquarters of HSBC bank. The transaction value amounted to £1,1 bln. This is one of the biggest transactions in the London office property market. Another big transaction was the sale of a skyscraper in Canary Warf for £1,06 bln in 2006. However, currently the record transaction is the sale of the office building territory (including the London Mayor’s office) on the south bank of the Thames for £1,7 bln.
Following Scotland Yard Great Britain’s Royal Mail sold its building with a permission for the reconstruction in the central London for £111 mln. At that according to conditions of the transaction if the project developer who purchased the object gets a new permission for the construction of the project, the Royal Mail will get another £20 mln as well as 50% of sales profit for the first year and 25% for the next two years.
According to one of the American periodicals, 4 of 10 most expensive living objects in the world are situated in London. The Buckingham palace tops the list. According to the appraisals, the cost of the royal house with 775 rooms, a cinema, a swimming pool and a 16-hectare garden and its own post office may amount to more than £1 bln.
The fifth in the list is the mansion priced at £140 mln, situated in the most expensive street of the British capital – the Kensington Palace Gardens, which belongs to the steel baron Lakshmi Mettal. The ninth in the list is Roman Abramovich’s house in the same street. The last in the top 10 most expensive houses list is the mansion in the same area in the Upper Phillimore Gardens street owned by Elena Franchuk.
One of the most great sales recently was the sale of the garage put on auction and sold for more than £500 000. The floor space of the garage allows for parking only one car, however, it is situated in one of the most expensive areas of London – Chelsea and has a permission for demolition and construction of the house with two rooms, a living room, a kitchen, two bathrooms and a garden.
Another transaction, which attracted attention, was the sale of a spacious apartment with a floor space of 95 sq.m in Knightsbridge. There is one bedroom in the apartment, a spacious living room, kitchen, balcony, bathroom, and the price amounted to as little as £150 000. However, do not be hasty in regretting that you missed the opportunity of the year. Leasehold term which all apartments and some houses in London have (the term of the lease of the land where the object is situated) is only 1 year. And its prolongation for 90 years will cost the new owner around £2 mln. Another surprising deal is the sale of an alleyway between the houses in Battersea: the arch-like passage with the floor space of around 84 sq.m between Starbucks café and a charity shop was sold for £260 000. The buyer will have an opportunity to build an apartment in the arch, as the object was put up for sale with an obtained permission for construction.
Forecasts of the specialists remain the same – prices for real estate in central London will continue their growth.
We are always happy to answer your questions with regard to the purchase and registration of the property in London. You can contact us via e-mail info@ashtonrose.com or via telephone +44(0)207 935 7564.
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