Lights out in shiny London

Prices push out locals,but where are the foreigners who are lapping up the city’s prime neighbourhoods?

Written by New York Times | Published: April 7, 2013 3:53 am


An odd thing was happening,or rather not happening,as dusk fell the other day across Belgravia,home to some of the world’s most valuable real estate: Almost no one seemed to be coming home.

It seems that practically the only people who can afford to live there don’t actually want to. Last year,real estate firm Savills found that at least 37 per cent of people buying property in the most expensive neighbourhoods of central London did not intend them to be primary residences.

“Belgravia is becoming a village with fewer and fewer people in it,” said Alistair Boscawen,a local real estate agent. He works in “the nuts area” of London,as he put it,where the house prices are anywhere from $7.5 million to $75 million.

The buyers,increasingly,are super wealthy foreigners from Russia,Kazakhstan,Southeast Asia and India. For them,London is just a stop in a peripatetic international existence that might also include New York,Moscow and Monaco.

A Belgravia resident from Colombia,who was shopping at a pet store where dog beds go for $358 and cat blankets for $289,said that there were two English people along her street. “French,American,Petra Ecclestone (that would be the daughter of Formula One impresario Bernie Ecclestone) and Russians,” said the resident,considering those closest to her. She asked that her name not be used because,she said,she was scared of the Russians.

London is not the only city where the world’s richest people leave their expensive properties vacant while they stay in expensive properties elsewhere; the same is true for Manhattan. But the difference is that so many of them here are foreign,and that they look to be buying up entire neighbourhoods.

Paul Dimoldenberg,a Labour leader,said the situation had reached a “tipping point” and was starting to concern lawmakers. “They may live here for a fortnight in the summer,but for the rest of the year they’re contributing nothing to the local economy. The specter of new buildings where there are no lights on is a real problem,” he said.

In its report,Savills found that in 2011-12,34 per cent of people buying residential properties in prime areas of London were from overseas. The salesclerk at a Belgravia clothing boutique,who also spoke on the condition of anonymity,said that at some times of the year the area was virtually abandoned. “We’ll shut for the whole of August,” she said.

London’s housing market is at odds with that in the rest of the country,floundering since the 2008 crisis. While housing prices outside the city fell 10 per cent in the past five years,inside London they increased 21 per cent.

Of newly developed properties in “ultra prime” apartment complexes,those offering hotel-style amenities and apartments priced at more than $7.5 million,78 per cent of purchases last year were made by foreigners,a report said. Brokers are marketing new properties abroad in places like Hong Kong and Singapore even before advertising in Britain.

The most visible,and also the most notorious,of the new developments is One Hyde Park,a $1.7 billion-apartment building of stratospheric opulence on a prime corner in Knightsbridge. Apartments there have been purchased mostly by foreign buyers who hide their identities behind murky offshore companies registered to tax havens like the Isle of Man and the Cayman Islands. According to The Sunday Times,only 17 of 76 apartments are registered as primary residences.

British newspapers have been trying since it opened two years ago to discover who lives there. Vanity Fair reported recently that as far as it could discern after a long trawl through records,the owners seem to include a cast of characters who might have come from a James Bond movie: a Russian property magnate; a Nigerian telecom tycoon; the richest man in Ukraine; a Kazakh copper billionaire; someone who may or may not be a Kazakh singer; and the head of finance for the emirate of Sharjah.

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