Record $296m for London penthouse

But building's developer warns of unsustainable asking prices in Britain

The Straits Times, 3 May 2014

LONDON - London's red-hot property market has struck a new record with the sale of a £140 million (S$296 million) unfurnished apartment, but even the developer of the opulent building warned that some asking prices in Britain were unsustainable.

Buoyed by the wealth of Russian oligarchs, Chinese tycoons and Arab sheikhs, London has become one of the world's most expensive markets, raising concerns ahead of national elections next year that locals are being squeezed out of the market.

"We're in boom-time prices, more expensive than we've ever been in the history of mankind," said Mr Nick Candy, one of the developers of London's One Hyde Park luxury apartments that are at the pinnacle of the super-prime residential sector.

"There is a concern over the market overheating," he told Reuters. "Everyone thinks the main central London is doing so well, (so) the ripple effect is going throughout (Britain), and some of the prices being achieved are probably unrealistic and not sustainable."

House prices across Britain have generally not recovered their levels from before the financial crisis struck in 2008, but they are rising at about 10 per cent a year, prompting some top policymakers at the Bank of England to sound increasingly concerned about the risks to the broader economy.

A source said an eastern European buyer bought a penthouse at the One Hyde Park apartment block for the record price. Mr Candy confirmed it had been sold but declined to comment on the price or name the buyer.

The 16,000 sq ft apartment is a "core and shell", with only external walls. The new owner will need to install his own walls, utilities and furnishings. Developer CPC Group said the flat could be worth £160 million to £175 million when furnished.

Britain's previous record for an apartment was set three years ago by Ukrainian billionaire Rinat Akhemtov, who paid £136 million (S$288 million) for a penthouse and apartment at One Hyde Park to knock together into one property.

There have been more than US$2 billion (S$2.5 billion) in sales at the block, whose developer is a joint venture between CPC Group and Waterknights, the private company of Qatar's Sheikh Hamad Jassim Jabor Al Thani. Candy & Candy, run by Mr Candy, was the interior designer and development manager for the project.

The wall of money chasing a finite amount of property has sent luxury London prices soaring almost 80 per cent since 2009, and while plutocrats' ostentatious purchases grab the limelight, prices have rocketed even in poorer areas. Prime central London house prices have risen 79.4 per cent since March 2009, against a 40.6 per cent increase in Greater London house prices over the same period, according to data from property consultant Savills.

Such is London's wealth that Savills calculates 10 London boroughs now have an aggregate property value equivalent to the total value of Scotland, Wales and Northern Ireland.

The British government has in recent months imposed new taxes on overseas purchasers, and the opposition Labour Party, which is leading in opinion polls for the national election, has proposed a tax on houses worth over £2 million.

REUTERS