Property Porn for London's Ultra-Rich

as a result and a falling currency. You're making it sound as if I want this to dave a cost of living crisis so I can sell another I'm David Merritt with Francine macquar in the London studio and this is in the City Bloomberg's podcast, connecting you to the stories at the heart of the day of London. So this week we are tackling the question of property and housing. It is the national obsession of course, and the warning signs of flashing that we may be at some sort

of tipping point for the housing market. This is a tough tough time to buy, so you're probably stretching yourself because of the cost of living, because of inflation to purchase that dream flat or is that dream house and everyone's scrambling to work out when should they re mortgage. I'm doing this myself at the moment as interest rates

forecast to surge. We've had Bank of England rates going up faster than they have done for many years, and perhaps a sense of panics setting in about what might happen. We haven't had a proper housing crash in this country for a very long time. Joining is now as London's bureau chief Neil Callen and also fair to say an expert on the housing market. What you've been covering for twenty two years and have received over five housing emails

from journalists asking from Martket advice. There's a lot of like first time buyer mistakes and people made that I'm happy to caution about because I have lived through a proper crash and eland where the value of my apartment fellent of one stage and you've seen booms and busts and boom like where are we in this kind of cycle? I think we're very much in the late stage of

the cycle. And when you look at the figures there the UK housing boom since the financial crisis was driven by cheaper interest rates so people could borrow more, people could borrow for longer. And now with the Bank of England raising rates because of inflation, a people have less money to spend, but they're going to have to pay more for their housing costs. And I was literally had a friend texting me last week saying she's looking at

her mortgage costs tripling next year. So you know, first of all, on average, what a new home buyer will spend two d and twenty thousand pounds on the place, which is which is quite expensive. I mean it's very, very expensive, especially if you're a first time buyer. Are we talking about possible market collapse that you know, the value actually evaporates, what's worst case thing? Are you so? At the moment houses in England are the most unaffordable

level ever. There aren't only nine times income. Again, that's a sign Again I'm a market that's reached the new he kind of market that might be vulnerable realistically because it's taking so long for sales to go through. It's going to be more of a slow puncture again, It's going to take a while for the effect that the

energy prices to come true. Lots of people are unfixed rate mortgages, but there are one point eight million people next year who are coming off a fixed rate mortgage, So it's going to take true to the four quarter last year before you're really starting to see the full impact of the mortgage rate increases, of the energy rate increases, of people having less money for food having to change and that just gives them less money to pay on housing.

Does that mean we're going to see defaults? Everything at the moment is negative for housing, including construction costs are going up so you can't necessarily it's much more expensive to even do an extension and things like that. So what sort of rates are we looking at? I mean, I think there is one big qualifier I have to add before I answered this, which is that the government every single time the housing market has slowed down, the government has kind of intervened to support it with the

sort of stamp duty measure or stamp. Julian helped to buy in particular and particular h and that has been a core tenant support in the housing markets. So the question is can they continue to do that help to buy his due to next year and maybe they extended, but then another question is will they have the money to be able to do that given the amount of money they've spent on COVID and they amount the money

they're going to have to help spend helping households. But all out of side, I think you could be looking at a financial crisis type reduction which was around in the UK. I'm not saying that's going to happen immediately. It will take time. It will take probably at least eighteen months to start to come true. And these things happen tend to happen slower than you think and then happen faster at the end. But I still need to have to qualify if the government may stop it from happening,

and it is in their interests to do so. Every single time the housing market slows down, the government stimulates demand, they do not stimulate supply, and that helps keep house prices high, which appeals to conservative work. Is London and Central London immune because of buyers from abroad? Well, Central London, the top end of Central London has already had a crash,

and has had a crash since just before Brexit. It has rebounded a bit in the last year or so, particularly at the very very top end where overseas buyers who would have bought two years ago or last year, you have all the pent up demand coming in at once. Sorry by top enemy properties over a million pounds or really realisticing is Prime Central London. You're talking five million pounds plus and for houses probably ten million pounds plus um. So the volumes of those sales are much higher. But

again it's a tiny part of the market. But even within that, if you look at Inner London, which includes Prime Central London and a few of the birds around it, how flat prices have been falling since January, but outside of that they're going up and they've actually just each record. So Prime Central London has had a bit of a comeback, but how sustainable that is we don't know yet. So far you're not seeing as much benefit from the pound the weaker pounders perhaps might have been expected. But in

all of these cases it comes down to geopolitics. So the real reason Prime Central London took off ten fifteen years ago was the Arab Spring and events like that caused a lot of people to move Monday money to London, and there is not the similar thing happening because of Russians and Ukrainians who already had money, have already bought in London. Whether we will see money coming from Dubai. That's that could be really interesting to watch, Neil Callen,

and thank you so much. So from quite wide look actually at the UK market and London in general to the very very high end. Yeah, that that's what we already want to read about, isn't it. What are the the people in the stratosphere spending their money on the super rich house important house. We can't get enough of it to say that we're not allowed to Okay, so we're allowed to call it housing porn and for which

we're going to be joined by the Secret Agent. He's one of London's top property brokers which he goes anonymously in order to protect his very importance customers. And he's seen a thing or two. He has a tale to tell from every celebrity and their house. We are joined, very excited to be joined today in the London studio by one of London's top property brokers for the very super prime end of the market. He goes by the

title of the Secret Agent. In fact wrote under that name in the f T for many years about London's property market. And we're going to stick with the Secret part because we really want to dive into the real juice of the market here, and I think keeping things secret might mean we get a bit more information. So maybe I just I'll just kick off with a pretty broad question. Now, there's so much bad news, isn't there about the economy, cost of living slow down and talk

in fact about possible downturn in the housard market. But is this any of this affecting your clients or are they all operating up in the jet stream somewhere where they are immune to all of these headwinds. I would say, you're right, Dave, they are operating in the private jet stream, floating above in a private jet. Yes, very much, say, And I don't think that there wealth has been significantly affected. And I think that their wealth is such that for

mas people, their home is probably their biggest asset. For the clients that we're dealing with, it's one of many assets, and normally you know they're lame, multiple properties, but their wealth will be greater through their businesses, through through other sources. I'm going to be the cross European show me the money. So what are we talking about? Like ten million plus in terms of property for London or more. Yeah, I think the super prime market in London is defined as

five million plus. Most of this sort of trading that we did is probably ten million plus. But so are you not saying anything? I mean, is there no chill going through people's veins when they look at the news coming up the rest of the year or his life as Karen was normal. There was certainly a few plants who in Easter time who had owned their houses for decades and they decided to put their houses on the market.

Then with the Ukraine War that Russians, no, no, no, no, we don't we We've never really dealt much with Russian oligarchs. I showed Mr Brown virtually few properties a while ago, but he never bought them. Know that they were British Ish families who had lived in their houses, as I said, probably bought them in the eighties and had lived in there for thirty thirty five years and we're thinking we're always going to sell and downside and moved to a flat.

So they were there was a British owners. So in terms of the foreign capital is saying none of them decided to say it was time to or not deciding it's the time to get out of this market. No, I think that those the foreign capital who we're going to go have gone pace Braxit. And I think the big one of the big pills that I see with clients who buy in London is the sort of education here. Yeah, but secret agents. So is there a secret I love

saying that. So secret agents tell me is there a pattern amongst the ultra high net worth individuals of at what point do they sell? Well? Well, I suppose they mean the two clients I'm thinking of had probably as

I said, bought three decades prayer. And I mean an interesting sort of fact the year before that when I was selling a house in notting Hill and they had there were two clients who had bought in the late seventies and one in Wandsworth and one in notting Hill in the sort of prime street of notting Hill going onto a communal garden, and they bath bought for two eighty thousand, and the client who sold in notting Hill sold for nineteen million, and the one in one's Worth

sold for three and a half million. So it just shows also how particular pockets within London have gone in the stratosphere. And one obviously you know if the ones Worth people would have been very happy happy, right, But it's not the kind of like winning the lottery and that. But I mean that the I mean the return on that that's the best investment ever, right, I mean, do

you and London property has been seen? Has it as an investment all around the world people to pull their cash in to get I mean, is it possible to get that sort of return anyway? Are there any where's the next nothing hill? Is it possible to have that sort of boom again? Give us some tips please, mr agent? Well I was. I mean, I'm slightly burst because I live notting Hill adjacent in um if some people call it made a veil when I want the value to be her, I refer to it as Little Vernice because

it sounds more moneyed Little Vernice. But I think that is possibly undervalued, possibly Queen's Park. I mean, I'm not just because of our client base. I don't really you know, I know South London is having a moment, but I'm not going to be an afficionalgo on Lewisham or Peckham. So that's COVID change. Do people want to buy minor houses or they still want central London? And actually is it's you know, money that elsewhere doesn't feel so safe.

Were thinking of Hong Kong. We're thinking maybe of certain parts of the Middle East where the buyers that are extremely wealthy say I need a second home in London or a first time in London. I thought that my business would pretty much be over when CAVID started, because that everybody was talking about cities being over. And I actually set up an affiliation with somebody in the CUTS world because I was brought up there and I thought

everyone's going to be moving there. The first gap after COVID, I sold a house in Kensington a video you know What's up video. The decorator came along to you because I insisted. I said I want the decorator as well. They didn't see the house and they didn't see the house there Google match it. It was in Kensington. They

bought for sixteen million over over over what. I don't think that picture quality was as good as zoom and and my and the clients who I was acting for selling the property, I think they they couldn't believe it. They just said that this is not Nobody is going to spend sixteen million. And until the day of exchange. They didn't believe it until it and it happened. So London, I think, is just remarkably resilient and the market is stronger now in prime London than it was immediately post covidd.

You do you walk in a place and say right that, I'm valuing this at fifteen million, and I know who

will buy it. I did see. I did see a house the other day which was sort of hidden and I and I knew the streets quite well at their major houses with big gardens and lots of security hard standing outside them, and there was this tiny little alleyway and um, it was this sort of French chateau in a third of an acre with a very cool sort of outhouse that felt as if you're in Laurel Canyon in l a as a sort of and the agent was saying you could be in Beard And I did

think that if you've got twenty million to spend, you probably don't need the Airbnb income of But I did say to I said, you know, I didn't even know if he's looking. I don't know what his taste is. But I said, Harry Styleship by this because it's very private and he could turn he could turn the little studio into a recording studio. So with Harry's listening, he can you can get in contacts. Well, you can get in contact with Francine and Day and then then then

they can connect us. What's the craziest thing that people have asked foreign houses? Do they ask you for a specif fix or do you assume that a lot of them than just redo them anyway like Trump did at the White House. When I started in the business, I think people wanted a blank canvase, so they wanted something that was tired and they wanted to make their own mark.

I think increasingly now and this probably happened with the sort of super developers, and maybe it's a sort of reflection on our sort of fast society that you want it and you want it now that now it's much harder to sell an unmodernized flat or house and people want turnkey. They're old Libyan school in Ely Place has been done that redeveloped and it's two houses and I think it's eight or nine flat and the starting prices for the flats of forty million, and most of them

have their own swimming pool. The flat have the swim because you go and you have a direct left access. One of the two of the flats have them on sort of reef terraces, and the other ones have direct lifts into sub basements where you go and have your swimming pools. So I think five of the flats have got swimming pools, and each of the flats we're done by a different designer, I mean big name designers, so

you literally artwork, furniture, everything. So you walked in and I mean I thought it was quite a risky strategy because you want everything to work and everything to be perfect. But people do have their own taste, and I think they haven't actually sold very well. And those brand new superprime development. Do you see the buyers there, Do you think all that stuff is gonna is going to sell? I think they'll struggle, Um the skirt of it. That's

just too much of it, I think. And I think that it's a very international market, whereas the market that we deal then primarily is international, but it's people who live here that London say home. So we have a lot of buyers who may not have been born in the UK, but they're sort of committed to living here, certainly for the foreseeable future, whereas the Chelsea Barracks developments and others. It's usually a third or fourth home. And I think, you know, maybe to a wealthy American or

Middle easterner. And I think those buyers, you know, why not staying clarages, you know, for for two weeks when you come over. So how many how many of the houses you sell you think remain empty throughout the year or mostly empty throughout the year? Very few? And and

the ones that do I find very depressing. I mean, we sold a house in Belgravia seven or eight years ago and it was Middle Eastern gentlemen who had bought it fourteen years before that, so it held it for four years and nobody had spent a night there, and it was used as a sort of storage facility, so I had amused at the back. So there were two I'm not very good with the cars, but I think a Rolls Royce Phantom and something else. And it was it was a depressing house to walk into. What is

the impact of the Russians having to sell up? Does it? Does it matter? That's all? For London. I think the impact is not nearly as great as has been talked about. Because I think the spread of property that the Russians own. You know, there's a lot in Weybridge and sorry for Junior Waters, there's some in Belgrave here. One of the houses Mr Rono Chains is on Kensington Palace Gardens sort

of Millionaires Ray beside Kensington Palace. It's a very very small percentage of the super prime property population, so it doesn't make a ripple really in the whole in the whole world. And are there buyers ready to come in? Do you think it's not like that place on Kenston Palace, Scotland. I mean that's a huge house. Yeah, what would you estivate? That's worth I should think between a hundred and fifty and two hundred million. And you've got you know, the

Mittel's next door. There's not many families who are people who could afford that? Right? But do you think that will sell? Reddy? I think that street will sell. I mean I think you know, the big whopper in sort of Winnington Rage and Hampstead could be harder, but that that street. I mean, I've I've got three buyers who would Yeah, who are or I know of them and I can get to them? Who would buy on that Street, secret, angent,

what's your secret to set to? And people trust you with big decisions, with personal decisions because it does really touch to who you are as a person, you want to live as a family. Well, I think, you know, part of my job is part therapy and understanding what people want and sometimes maybe seeing something that they don't

realize that they want and uncovering it. I remember my biggest client in the first big deal I ever did, was a house in Eaton Square and the client was buying it for her son, who was twenty two years old. And we went out for lunch and she said to me, you know, should I buy this house? And it would have been my you know, greatest commission of her And I said to her, no, don't buy this house. And she always called me darling, still does and she said, Darling,

why why why don't I buy this house? Why don't I buy it? Because she also says that words a lot And I said, you know, your son is twenty two. A freehold house in Eaton Square is the sort of apergee of your property aspirations. And where is he going to go? Hill? There's nowhere to go. And she said to me, Darling, that's where I like you. She was a test. She bought the house. She bought the house, but I told her not to buy the house, and four years later she bought her house. That was more

than I was wrong because you could go higher. She bought her house double the price of the house in Eaton Square for the sun. So it but it's it's sort of trust and them knowing that you're looking out for them. Thank you so much, Secret Agent. Thank you very much. I feel like I'm an octonaut. Thank you, Secret Agent. Should I say a secret agent? Or is it? Thank you Mr Agent? I just love it so much, thank you Mr Secret? Is it, Mr Secret? Mr Agent?

I love it. I'm really just buy movies that but um, there we go, do all of that right, Thank you so much, Secret Agent. Thank you, thank you very much. I'm definitely using the first brilliant h