Bloomberg News

Luxury’s Not Enough for London Homebuyers to Outdo Neighbors

July 05, 2011

(Adds development pipeline in 15th paragraph.)

July 5 (Bloomberg) -- The price of a luxury home in central London can jump as much as 3,000 pounds ($4,800) a square foot with the help of a pair of white gloves costing a few pounds.

Houses and apartments described as luxury or prime in the U.K. capital can fetch from 1,000 pounds a square foot to more than 4,000 pounds. The widening disparity prompted property broker Knight Frank LLP to define the touches like a white- gloved doorman that separate truly elite from merely prime.

“One man’s luxury is another man’s commonplace,” said Stephan Miles-Brown, the London-based firm’s head of residential development. “People say I’ve got a wine cooler and a screening room; developers are saying: ‘what else can we offer to attract them?’”

Luxury-home values have rebounded faster than those for other London properties, reaching a record last month, as the pound’s weakness attracted overseas purchasers. Knight Frank estimates that prices for prime residences start at 2 million pounds, though you may have to pay more for one with a wine cellar, home cinema, squash court or health spa -- not to mention accommodation for the staff.

At the bottom end of Knight Frank’s five tiers of luxury, a buyer should expect no less than a 24-hour concierge team, secure underground parking and a terrace or balcony. Prices are seen increasing by 500 pounds a square foot with amenities such as a wine cooler, slab marble and a ceiling at least 2.7 meters (8.9 feet) high.

‘Layers of Value’

“What drives value is location, but also product, views, architecture and amenity,” said Ed Lewis, director of new development sales at Savills Plc. “All these things add to the layers of value.” Savills is Knight Frank’s biggest competitor.

Six apartments at One Hyde Park, the luxury-condominium complex in the affluent Knightsbridge neighborhood, sold for an average of 6,000 pounds a square foot last year. That includes a view of the west London park, service from the Mandarin Oriental hotel next door and hand-painted silk wallpaper. The building was designed by Rogers Stirk Harbour and Partners, the firm that worked with Renzo Piano on Paris’s Pompidou Center.

A one-bedroom duplex in the development went for 9.85 million pounds, according to the Land Registry.

“Luxury isn’t enough,” Miles-Brown said by telephone. People using “words like prime, super-prime and uber-prime are looking for ways to redefine the word luxury.”

Gaggenau Kitchen

Having a health club, resident’s wine cellar and screening room with general-release movies helps push prices into the 3,000 pounds-a-square-foot bracket. Add 500 pounds for a limousine service, a Gaggenau kitchen and a squash court.

Top-end lavishness, starting at 4,000 pounds a square foot, will be in an iconic building designed by a famous architect, such as Piano’s Shard skyscraper in London, according to Knight Frank. It will include a top international hotel brand and spa operator, stores and restaurants. A white-glove doorman will serve at the internationally recognized address.

“You don’t know what you want until you’re offered it,” Miles-Brown said.

The 72-story Shard will have about 12 apartments on floors 53 to 65. The tower will also have restaurants and offices as well as hotel rooms operated by Shangri-La Asia Ltd., Asia’s biggest luxury hotelier by market value. The building is under construction in south London’s Southwark neighborhood and apartments aren’t yet being offered for sale.

Improved Outlook

Luxury properties in the city costing an average of 3.7 million pounds rose 8.1 percent in June from a year earlier, Knight Frank said last week, pushing its Prime Central London Index to a record. That prompted the broker to predict a gain of 9 percent for the whole of the year, up from an earlier forecast of 3 percent.

London has luxury-home developments valued at about 21 billion pounds in the pipeline, EC Harris LLP said yesterday. Investors and developers plan to build 9,000 prime apartments and houses by the end of the decade, according to the consulting firm, which is based in the city.

Rising demand is extending the upper end of the housing market beyond the central districts. Three penthouse apartments at Barratt Development Plc’s Putney Square development were the first to sell for more than 1,000 pounds a square foot outside of the city center, said Gary Patrick, regional sales director at the London-based company.

Barratt, the U.K.’s largest homebuilder by volume, sold the penthouse apartments overlooking communal gardens for about 1,100 pounds a square foot compared with an average of 730 pounds a square foot for the other 157 units on the site.

“The specification and design maximizes your revenue, it doesn’t create the revenue,” Patrick said by phone. “If you beef up the concierge service and install a better quality kitchen, those bits and pieces can nudge up your achievable price.”

--With assistance from Simon Packard in London. Editors: Jeffrey St.Onge, Andrew Blackman.

To contact the reporter on this story: Chris Spillane in London at cspillane3@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


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