Nigel Lewis talks Super-Prime Property Market with DealMakerz
The Hidden Side Of London’s Ultra Exclusive Super Prime Market
It’s been a roller-coaster ride for the luxury London super-prime property market over the past 35 years as prices have increased by 2,000% or more in some areas.
Following booms during the 1980s and late noughties prior to the global financial crash, as well as up-ticks during 2013/4, prime prices in many London boroughs are now between 15% and 20% below their most recent peak in some areas.
There is light at the end of the super-prime tunnel, though; activity in this market for properties worth more than £15 million increased last year, according to Savills.
Best in class
“The best in class within this market is still attracting competitive bidding but those on secondary streets or busy roads, not so much,” says Philip Eastwood at The Buying Solution.
But away from the house price turbulence within these markets, a significant mini-industry has been quietly developing to serve its high net worth residents and their properties.
This includes specialist sales and lettings companies, buying agencies, concierge services, property management firms and in the case of GoGeoffrey, a subscription-based butler service.
“These kinds of properties are very bespoke so selling, buying or managing them requires a different kind of approach – they’re like a bespoke suit or couture dress,” says Eastwood.
“Presentation is key, so they have to be dressed expensively too – when you’re spending that much money you want it to make an impression and it’s not unusual to spend £100,000 getting a new or resale property staged for sale.
“I came across one property recently on which the vendor had spent £50,000 on the garden alone just for the sale.”
Say hi to HNWIs
So who are these HNWIs? Jo Eccles, MD of specialist London property search firm SP Property Group, says the clients it helps find properties to rent and buy in London are largely family offices, high profile sports personalities and entrepreneurs.
“We work closely with clients, taking time to understand their particular needs and tailoring our service accordingly,” she says.
“No client or requirement is the same – we may be buying a trophy family home, building a long term buy-to-let portfolio with inheritance proceeds, or advising on how to achieve the best yields on a rental portfolio.
“Above all, the HNWI community is very tight-knit – 70% of our clients come from word of mouth recommendations – either previous clients or from others offering services to HNWIs such as private banks and lawyers.”
At a glance
- A small but growing number of companies are now servicing the London super prime luxury property market.
- Suppliers including property management, buying agents, sales and lettings specialists and even Uber-style butlers.
- HNWIs tend to be family offices, sports and other celebrities, and those in the legal profession.
- Homes in this sector can cost up to £8 per square foot a year to run.
The companies serving London’s luxury property market are a niche but nevertheless lucrative band of businesses all of whom are playing catch up with other prime property markets around the globe and in particular those in the US, according to Dean Main of high-end property management firm Rhodium.
He is one of at least eight boutique super-prime property management companies claiming to offers services to luxury homeowners in London. Some of his better-known competitors include Quintessentially, John Taylor, Gore, Knightsbridge Management and the London Management Company.
“London has always attracted HNW buyers and despite our current political turmoil, it will continue to be a haven for wealthy people for a whole host of reasons.”
“However we have seen growth in the number of services specifically targeting this audience from buying agencies to bespoke moving agencies to interior stylists all offering personalised and high-quality services.”
Nina Harrison, Director at Haringtons buying agency
Main set up his business eight years ago after noticing – as a developer – that the super-prime property management offering in London was lacking, and it’s snowballed successfully from there as other developers have begun using his service.
“The luxury newbuild super-prime service experience is much more advanced in places like New York or Miami,” he says. “If you walk into most London apartment buildings you see the same traditional half-asleep concierge not really doing much or being proactive.
“The average value of the apartments we look after is £15 million and we have approximately 2,500 clients in the seven key super-prime markets including Kensington, Belgravia, Chelsea, Knightsbridge, Mayfair and Marylebone, which is quite astonishing really.”
Main says his company’s success has been built on understanding how HNWI families use the buildings they live in, partly by selling shares in the company to the Monaco royal family. In return, he has gained useful insights from their unique experiences of running a luxury property empire, which is what the principality is, essentially.
He also says the secret to delivering high-quality service in the London market is to keep its niche – volume operations are not the way to go because the capital does not have large-scale luxury developments but rather smaller, boutique ones.
Rhodium also works with developers from the planning stage onwards and in consultancy mode focuses on designing the developments, and then later operating them.
What do the wealthy want?
“In terms of the services offered by the developments themselves, a concierge, gym, pool are now expected as standard by a HNW buyer,” says John Morley from estate agent Johns&Co.
“Many of our international investor clients are what we call a hybrid investor – they are buying a property for their children to live in whilst they study in London but it will become an investment buy afterwards. As such, they expect the full suite of services that come with a five-star hotel.”
John Morley from estate agent Johns&Co.
But Rhodium is not the only property management business innovating in the super-prime sector.
Bold & Reeves was started by the property manager and former soldier Bill Shipton six years ago after he began looking for an outsourced property management solution for the 15 homes in London that he was looking after on behalf of a Middle East family.
“I looked at the firms who purported to provide a service for luxury properties and it became quite clear to me that they didn’t have what I was looking for,” he says.
“I had a tech background too so I brought that and property management together for the super-prime market.
“The guiding principles of property management are proactivity and continuity of knowledge about a building, so it struck me as odd that no one had built tech that could be a digital property logbook, particularly when buildings at this end of the market are every bit as complicated as a jet or car to maintain and operate.”
Top tier tech
Bold & Reeves has built an IOS web-based app for owners and their ‘assistants’ that enables them to have a record of everything that has happened to their property or that is planned or predicted to happen.
A secondary system monitors the property in real-time and, for example, can predict that air conditioning units are about to fail.
“It also delivers both visibility and transparency about the costs of their homes; I always find it astonishing that people spend so much money on a property but are often completely unaware how much it costs to run.”
Shipton says he charges £2 per square foot for his service and that luxury homes cost £6-8 per square foot to run each year.
“We can monitor everything that moves within a property and second-guess problems by enabling the system to machine learn ‘what normal looks like and therefore spot deviations.
“The tech enables our property managers to be three times more efficient than those who use traditional methods and help them manage more properties than they would be able to without the tech. ”
The Bold and Reeves app also appeals to at least two of the three primary concerns of HNWIs – not to waste their time or their money, and to be discrete, something most players in this market are hoping to achieve.
“One of the main reasons why HNWIs use buying agents – on top of the time and effort we save them – is that often they don’t want their buying or selling activities out there in the public domain,” says Philip Eastwood.
This is partly down to the small size of the market. If you’re selling a home worth £1 million to £5 million then yours is one of over 10,000 for sale at the moment in London. But if a home is for sale at £15 million or more, it’s hard to hide it among the 130 currently publicly on the market.
The luxury property market, therefore, will continue to expand for some time as the globe’s gang of HNWIs ask for their property portfolios to be managed, albeit discreetly.