Here is the scientific formula for calculating London’s top property prices: think of a figure, double it, add a few noughts, and voila! — or should I say nazdarovie, of whatever it is that oligarchs say when toasting a deal.
Ordinary mortals nowadays are worried sick about their mortgage repayments, set to rocket when their short-term fixes come to an end and real-interest rates kick in. They lie awake at night with images of Northern Rock queues flashing before their eyes and wonder why Mr Darling, whose eyebrows failed to reassure over that issue, also failed to do anything for first-time buyers since taking office.
But meanwhile, in a place far, far away, known as Prime London, property monopoly has turned into property porn. The rest of us look on, bemused and horrified, as aliens rich beyond the dreams of avarice compete as to who will pay the highest possible price for what were, until recently, no more than nice flats and houses.
The press, of course, plays its role in this game — and I am as guilty as the next hack. When word started to spread that Qatar’s new prime minister, Sheikh Hamad bin Jassim bin Jabr al-Thani, bought an unbuilt penthouse at One Hyde Park off-plan for £100 million, it didn’t occur to most reporters that as this guy was funding the entire development, he was unlikely to be paying a record sum for what is effectively one of his own 86 flats but might, on the other hand, be very keen to hype up the prices of the others by ‘leaking’ this kind of information. When it comes to property porn, Fleet Street wishes to see no evil.
So much so that a new game is now afoot under its uncritical gaze: flipping.
In the dim and distant past — say five years ago — it was commonplace to acquire a property in disrepair, do it up and sell it on for profit a few months or even years later. Flipping is the same, except without the irksome ‘doing it up’ bit — oh, and without the boring wait before reselling. You simply buy something for £10 million or more, and then put it back on the market very quickly at around twice the price. Or more.
Take Rutland House. In June the house in Rutland Gardens, Knightsbridge, was bought for £18.25 million and the next-door summer house for around £4 million. The buyers were the London property pornographers-in-chief: Christian and Nick Candy. Rutland House is currently an office block. There is ‘enough space’ for seven reception rooms, five en-suite bedrooms, staff accommodation and a swimming pool and gym, but they don’t actually exist yet. When they first agreed to buy the building the Candy brothers intended to convert it into a lavish home before reselling it. But then they thought, what the hell, why don’t we just put it up for sale for £32.5 million anyway, and perhaps we can trouser around £10 million without lifting a paint brush? So they did. The agents, Savills, are reporting interest from businessmen from the Middle East, Russia, China and Singapore. Well, they would, wouldn’t they. And who knows, it may actually happen.
The Candy brothers may have got the idea from Marcus Cooper, who must be the flipping record holder — if he brings it off, of course. In mid-July he bought Witanhurst, a Grade II-listed Queen Anne-style mansion set in five acres at the top of Highgate Hill, for £32 million. By the end of August he had put it back on the market — at £75 million. Witanhurst has, as they say, a history. It’s the second largest house in London after Buckingham Palace, but it has stood largely empty for many years and its dilapidated condition has earned it a place on English Heritage’s ‘at risk’ register. When he bought it, but before he flipped it, Marcus Cooper announced: ‘Our aim is to restore and develop Witanhurst beyond its former glory, to create a private residence of exceptionally high quality that will become London’s first £150 million home.’ Reader, no house has ever been sold in London for £150 million, or even £100 million (unless you believe the story about the Qatari and his penthouse). The current record stands at about £60 million, paid by the
Hindujas last year for a section of Carlton House Terrace near Trafalgar Square, which was also in office use at the time. Lakshmi Mittal paid £57 million for 18/19 Kensington Palace Gardens in June 2004, after the previous owner, David Khalili, spent millions doing it up.
No one has bought Witanhurst yet, nor Rutland House. But Mr Cooper and the Candys have nothing to lose by trying it on. And meanwhile the idea of flipping gains credibility by being talked about — and it is infectious.
Casino Lodge, an elegant Grade II-listed Regency villa in the select enclave of Park Village West on the Crown Estate’s Regent’s Park flagship, was bought in December 2006 for £5.95 million through a company registered in the British Virgin Islands. Eight months later it was back on the market and the owner is said to have turned down an offer of £11 million for the 126-year lease. Apparently he wants double what he paid, and, if successful, will have made a profit of around £6 million in under a year. And it’s not as though he bought a wreck and converted it into a palace. The previous owners, who bought it in 1999, had already done the restoration and modernisation.
Further down the food chain, flipping has become another example of the need to be well-off already if you want to become better off. Take the 711 flats now being built on the site of Arsenal’s former Highbury stadium. Prices of flats here have risen dramatically since sales began in October 2005, and those who reserved them early can now make massive gains without the bother of moving in, which won’t begin until next July.
According to the marketing team, over 90 per cent of the private flats have already been sold. Last autumn the cheapest price quoted for a one-bedroom flat was £230,000 and in March the price range was given as between £270,000 and £1 million. But the cheapest one-bedroom flat still available now costs £325,000, while the best three-bed penthouse will set you back £2 million. So the potential profit ranges from £100,000 for a one-bedroom flat to £1 million for a penthouse. Flippin’ tempting.
Mira Bar-Hillel is property and planning correspondent of the London Evening Standard.