Some of the world’s richest people are snapping up luxury London mansions despite the coronavirus pandemic and lockdown – but only if the seller knocks a million or two off the sale price.
Estate agents are reporting that rich overseas buyers have spent tens of millions on historic central London properties during the pandemic even though they have often only seen the homes over Zoom video calls.
A Russian energy industry billionaire bought a five-bedroom, seven-storey townhouse on Old Queen Street overlooking St James’s Park in central London for £15.45m, two days after the government allowed the reopening of the housing market last month. The 6,573 sq ft grade-II listed property at 26 Old Queen Street, close to the Palace of Westminster, had originally been listed for sale at £16.5m.
Research by the property consultants Knight Frank shows luxury London house prices fell by 2.1% in April – the biggest one-month decline since 2009 in the height of the financial crisis.
Prime central London prices declined by a further 1.4% in May compared with April, taking the annualised decline to 5.1%.
The declines are bigger than for overall property prices, which according to the Nationwide were up 0.9% between March and April and then down 1.7% between April and May.
Henry Pryor, an independent luxury property buying agent, said his clients were considering buying but only if they thought they were getting a bargain.
“Prices have definitely come down a lot but we won’t know by how much until July or August,” he said. “My clients would like a 20% discount to reflect the risk [they’re taking] but are prepared to take 5-10%.”
Pryor said one of his clients was interested in buying a new-build luxury flat in Fitzrovia, central London, with an asking price of £5.5m. “The agent showing it told me he thought the developer would take £4.5m before I had even got my rubber gloves and mask on to look round,” Pryor said. “We will probably bid £3.5m, and see how that goes.”
Tom Bill, Knight Frank’s head of London residential research, said: “It feels remarkably similar to the period that followed the EU referendum. It will take a while for the market to find its feet.”
Bill said that while prices have declined, there are likely to be less forced fire-sales than during other financial crises as interest rates are at record lows, meaning rich owners can cover their mortgages.
Jeremy Gee, the managing director of Beauchamp Estates, the agency that sold the Old Queen Street property, said sellers were being “realistic in the face of a pandemic” and accepting lower offers. The property was owned by the billionaire Benisti family, who made their fortune from the Montreal-based clothing brand Point Zero.
Despite selling the property for less than they initially hoped, the Benistis said they were “so confident about the super-prime London market” that they had put the house next door, which they also own, on the market for £17.75m.
The family said they expected demand for traditional luxury family homes to increase after the pandemic as the super-rich may be more cautious about the possibility of virus infection at luxury apartment complexes such as 1 Hyde Park.
“Our expectation is for houses to outperform flats in the £10m-plus marketplace due to the changing consumer behaviour triggered by the Covid-19 pandemic,” said a spokesman for the Benisti Family Office, which manages the family’s wealth.
“Buyers are wanting more space, a private garden and direct access to a park. They are wary of apartment buildings which need to be accessed by shared foyers and passenger lifts. We believe we are currently in an extremely good position to sell or let this house over the coming months.”
Gee said prospective buyers have also expressed interest in a four-bedroom 4,700 sq ft home in Mayfair on the market for £18m. And an oil trader is in talks to buy a two-bedroom Knightsbridge apartment – that he has only viewed over Zoom – for £12.5m
