Author Archives: Tom

The prices of central London luxury real estate have been predicted to increase by 8% by the end of this year by Savills plc, even though they had previously predicted last November that prices would fall.

This increase is due in no small part to overseas buyers continuing to take advantage of the weak pound. The average prices of homes costing $4.8 million or more in the upmarket nieghborhoods of Belgravia and Knightsbridge, increased by 9.6% in the second quarter from the same period last year, while the quarterly increase was 3.4%.

Lucian Cook, a researcher for Savills said “Overseas demand has been much stronger that we expected. The big unknown is what happens in Greece-will it be a catalyst for more demand because of the outlook in the euro region?”
Foreign buyers are still seeing the U.K. as a safe haven for their wealth, and the fact that sterling has lost 25%v of its value against a number of currencies only makes the real estate here more attractive. Overseas buyers accounted for 72% of the sales of prime London property in the first quarter, up from 60% three years earlier.

Last November Savills had predicted that prices of luxury apartments and homes in London would decline by 1%, as British buyers would be deterred by worsening economic conditions. Some 55% of sales in central London were by British owners, but they are choosing to re-invest their money in the more affordable suburbs within the capital.
Savillls now predicts that property costing more than £1 million pounds will probably increase in value by around 6%, as areas such as the south-west of London become increasingly gentrified. It predicts that the prices of prime residential real estate outside London will fall by up to 3% this year. It predicted a fall of just 1% last November.

(Reuters) – The tycoons of Europe’s troubled southern periphery are buying up homes in London’s billionaire enclaves and shifting cash to the City’s banks as they flee the euro zone’s debt crisis.

Estate agents report buyers from Spain, Italy and Greece are muscling in on the residential market in London’s elite neighbourhoods such as Mayfair and Belgravia, joining established colonies of rich Russians, Indians and Gulf Arabs.

Data from upmarket British property consultant Savills (SVS.L) shows that buyers from Spain, Italy and Greece have increased their share of property purchases in central London’s smartest neighbourhoods since the start of the year.

“Southern European numbers seem to have increased,” said Yolande Barnes, head of Savills Research.

“In 2011, I suspect the lure of a ‘safe’, sterling denominated asset once again looks attractive as the financial markets in those countries… look particularly precarious.”

TT of properties worth more than 15 million pounds, and 43 percent in the 5 million to 15 million pounds range, the research shows.

And London’s private bankers — specialising in clients whose wealth is measured in tens of millions of pounds — also report they are booking more business in Europe’s so-called sun belt, belying the region’s financial crisis.

The sixth Duke of Westminster, Gerald Cavendish Grosvenor, might have the sweetest real estate deal on the planet.

Through Grosvenor Ltd., the family real estate company, he has perpetual and exclusive ownership of most of Mayfair and Belgravia, the ultra-posh London neighbourhoods where a BMW is considered a lowly grocery getter. Buying a house or apartment in either place is exceedingly difficult. That’s because the properties, which came into the family in 1677 and cover about 300 acres, are almost always occupied on leases that can range from a few years to a century. When the lease is up, the duke (or his heirs) takes back the keys.

And thanks to the extraordinary rebound of the London property market in the past year or so, the property values and lease prices attached to them are rising, pumping up Grosvenor’s profits. John D. Wood & Co., a London property agent and manager, tracks values and found that large houses (more than 3,500 square feet) in the prime parts of central London fell about 40 per cent between 2008 and mid-2009. Since then, they have recouped almost all their losses, marking one of the sharpest and quickest comebacks in recent decades.

By North American, even Manhattan, standards, the cost of accommodation in West London is outrageous. Example: The asking price on one three-bedroom, 3,000-square-foot apartment on Belgravia’s Eaton Square is £7-million ($11-million). For that, you get 16 years. The lease price works out to $58,000 a month.

No wonder the Duke of Westminster is ranked by The Sunday Times Rich List as the wealthiest Briton (if not resident), with an estimated 2010 worth of £6.75-billion. If the London market keeps rising, the next tally will no doubt pump up the figure. Last year. Grosvenor Ltd.’s pretax profit was £394.8-million, against a loss in 2009 of £235.8-million, and its net asset value rose 9 per cent to £2.78-billion.

Mark Preston, Grosvenor’s chief executive officer, says the bounce back in both the residential and commercial market, notably the latter, has been remarkably strong.

That’s quite a change since 2009, when there were endless predictions that all things real estate faced a long and brutal downturn as British unemployment soared, the national budget deficit exceeded Greek levels and the government resorted to nationalizations to save the banking system. On top of that, a few of the rare healthy banks, such as HSBC, threatened to skip town in retaliation against the threat of higher taxes and tougher financial services regulation.

Mr. Preston credits supply constraints as one of the prime drivers of both the residential and commercial property revival. During the recession, construction all but collapsed, “so there is very, very small supply now,” he said. With two- to three-year lag times between the start of a project and occupancy, he thinks values could keep going up.

He also thinks London achieved a greater degree of safe-haven status in the past year or so. Political turmoil, such as the Arab uprisings, convinced wealthy foreign investors – from billionaires to sovereign wealth funds – to diversify. “In times of crisis or uncertainty, investors flood to gold and London property,” he said. “One of the great attractions of the London market is liquidity. The market is transparent and investors can get their money out if they want to.”

Henry Overman, the director of the Spatial Economics Research Centre at the London School of Economics, thinks the bank bailouts contributed to London’s bounce back. The nationalizations and other support measures saved the weak banks from almost certain destruction and helped the stronger ones muddle through the downturn.

Most of the banks are based in London and most of their jobs were preserved. Employment in financial services has actually been rising in London, if not in other parts of the country.

Commercial space is, once again, in short supply. Peter Damesick, chief economist for Europe, the Middle East and Africa for CB Richard Ellis, the world’s biggest property adviser, said 15 million square feet of commercial space was leased in London in 2010, the highest level since 2000. The long-term average is 12 million square feet a year. “The drivers of the London economy are geared to the global markets and that allowed the property market to bounce back quickly,” he said.

The residential market has also regained some strength, making even modest homes costly. The average London home price is now almost £337,000, which might buy a cramped, two bedroom flat in need of renovation well away from the city centre.

London’s property revival is all the more impressive when you consider what’s happening elsewhere. Outside London, the housing market is still firmly in recession. The latest figures from the U.K. Land Registry office show that of the 11 regions measured in England and Wales, London was the only one in positive territory in the year to the end of March, with a 0.8-per-cent average house price increase. The worst-hit areas were the North East (down 9.3 per cent), Wales (down 7.2 per cent) and Yorkshire and the Humber (down 5.3 per cent).

It’s hard to imagine that London is actually part of the same economy. London home prices are well more than three times the value in the North East and twice the value in the South West. The slow economic recovery beyond London helps to explain the extreme price gaps.

Jobs are still being shredded in Britain’s secondary cities, in good part because of the brutal public-sector spending cutbacks as the national and local governments try to balance their budgets. This comes as a blow to cities such as Cardiff, Swansea and Liverpool, which had had some success in replacing lost industrial jobs with government jobs, only to see austerity programs take them away at an alarming rate. Relatively speaking, London has fewer public sector jobs than most parts of the country.

Will London’s good fortune last? Mr. Preston, Mr. Overman and Mr. Damesick all agree that severe supply constraints of both residential and commercial property could keep the party going for a while. Mr. Overman said Britain had 120,000 housing completions in 2010, the lowest level since the 1920s. By his estimation, that’s half the level required to meet demand.

The shortage is particularly acute in London, which is ringed with a greenbelt, has many protected heritage neighbourhoods and whose mayor, Boris Johnson, dislikes high rises.

Mr. Damesick thinks the banks are the biggest single potential threat to London’s enduring recovery. If the euro zone debt crisis takes a turn for the worse, all of Europe’s banks could face monster losses and job reduction. Higher taxes on corporations and the wealthy could trigger an exodus from London. Taxes have indeed been rising, but few businesses, aside from a few hedge funds, have left town.

In the meantime, London is pretending the recession and property downturn never happened. The property listings say it all. Another residence on Eaton Square, this one a large house with an elevator and a courtyard garden, is yours for a mere £28-million.

The 2011 calendar for the Superleague Formula by Sonangol has been announced with the provisional 12 rounds to include a mixture of new and returning venues along with some historical and established circuits.

A big development in the calendar comes in the form of three flyaway events to be held outside of Europe which is to build on the success of the Chinese events last October. However, the Asian races held at the Ordos circuit and Beijing will still form part of the calendar and will be bought forward to make room for the brand new events at the end of the season.

The first half of the season will provide a European based championship, kicking off in Monza, Italy in April which last held a Superleague race in 2009. Portimao will host the following round in Portugal before the teams head to Holland and the Assen circuit. The Nurburgring in Germany plays host for round four with Navarra and Spain and Zolder in Belgium hold events in July. The European leg finishes off at Donington Park which returns to the series after missing out last year to Brands Hatch.

After a five week break, the teams jet off to China to take on the two Asian rounds in September whilst October will hold two of the yet to be named new rounds before the season finale in November.

Superleague Formula Competitions Director Robin Webb said: “Having successfully doubled our number of rounds last year, we believe a 12-event calendar – which don’t forget comprises 36 races in total – is the perfect number to stick with moving forward. The Chinese rounds taught us a lot this year so I think Superleague Formula’s fourth season of competition is the right time to be visiting more countries further afield and introducing the series to new fans and markets. The combination of seven European and five flyaway events is the perfect ratio.”

Provisional 2011 Superleague Formula Calendar:

Round 1 – Autodromo di Monza, Italy – April 16/17
Round 2 – Autódromo do Algarve, Portugal – May 7/8
Round 3 – Circuit TT Assen, Holland – June 4/5
Round 4 – Nürburgring, Germany – June 18/19
Round 5 – Circuito de Navarra, Spain – July 2/3
Round 6 – Circuit Zolder, Belgium – July 16/17
Round 7 – Donington Park, UK – August 6/7
Round 8 – Ordos International Circuit, China – September 10/11
Round 9 – Beijing International Street Circuit, China – September 17/18
Round 10 – TBC Non-European – October
Round 11 – TBC Non-European – October
Round 12 – TBC Non-European – November

Suppose that once a week, ten men go out for beer and the bill for all ten comes to £100.If they paid their bill the way we pay our taxes, it would go something like this..
The first four men (the poorest) would pay nothing.
The fifth would pay £1.
The sixth would pay £3.
The seventh would pay £7.
The eighth would pay £12.
The ninth would pay £18.
And the tenth man (the richest) would pay £59.
So, that’s what they decided to do.

The ten men drank in the bar every week and seemed quite happy with the arrangement until, one day, the owner caused them a little problem. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your weekly beer by £20.” Drinks for the ten men would now cost just £80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free but what about the other six men? The paying customers? How could they divide the £20 windfall so that everyone would get his fair share? They realized that £20 divided by six is £3.33 but if they subtracted that from everybody’s share then not only would the first four men still be drinking for free but the fifth and sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fairer to reduce each man’s bill by a higher percentage. They decided to follow the principle of the tax system they had been using and he proceeded to work out the amounts he suggested that each should now pay.

And so, the fifth man, like the first four, now paid nothing (a100% saving).
The sixth man now paid £2 instead of £3 (a 33% saving).
The seventh man now paid £5 instead of £7 (a 28% saving).
The eighth man now paid £9 instead of £12 (a 25% saving).
The ninth man now paid £14 instead of £18 (a 22% saving).
And the tenth man now paid £49 instead of £59 (a 16% saving).
Each of the last six was better off than before with the first four continuing to drink for free.

But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a £1 too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get £10 back, when I only got £2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!” The nine men surrounded the tenth and beat him up.

The next week the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important – they didn’t have enough money between all of them to pay for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just might not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible .

Only in Portugal would they allow a plane to take off from the race track when cars are racing!!

http://vimeo.com/17153715