The Problem With Luxury Housing

Lifelong Londoner Matt Blake investigates his city's obsession with mega-wealth

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We all know that ordinary Londoners are hamstrung by skyrocketing property prices, inflated by overseas investors from Russia, the Middle East and China looking to turn millions into billions. Most of us have made peace with the idea of living out our final days in a shared-ownership new build in Thurrock, while the world's super-rich watch from their revolving cloud-restaurants above Mayfair, sipping Coconut Ceviche cocktails out of rhino horns and eating gold. Most of us. But not me. I, for one, am cross about it. Trouble is, the “luxury flat” market is so secretive that I’m not sure what exactly I’m cross about.

For one thing, what does “luxury” mean in this context? It's surely more than a walk-in closet and a smart fridge that tells you when you've run out of milk. “They want a porter, a panic room, a cinema, a spa, a personal trainer,” one luxury London estate agent, whose clients have included Saudi Royals and Siberian oil tycoons, tells me. “They want 20-metre ceilings and underground parking for their Ferraris and Lamborghinis. Everything has to be bespoke and expensive, from the carpets to the taps.”

This is not hyperbole. The new Nine Elms development in Battersea, boasts a 24-hour butler service, interiors by Versace and a swimming pool suspended mid-air between buildings. Then there's One Hyde Park – “the most exclusive address in the world” – which offers residents bulletproof windows, a private cinema and a golf simulator. There's one problem: two years after its launch in 2011, just 19 of its 80 apartments were registered as “occupied by individuals” for tax purposes. Of the rest of the properties, ranging from £6m for a one-bed apartment to £100m-plus for a penthouse, the council were treating 16 as empty and 26 as second homes. The remaining 23 are registered as "occupied by companies" – a purposefully vague term.

“One Hyde Park is an example of flats that've been purchased by these crazy rich guys and lie empty for 11 months of the year,” the agent says. “It's purely a trophy thing, something they can tell people at ambassadors' receptions, 'I've got this apartment in London that I bought for £20m three years ago and now it's worth £30m.' It's not necessarily about having somewhere to live. Some of these guys don't even physically see these properties at all. Ever.”

The deals aren't struck on Big Brother swivel chairs over glasses of Perrier in Foxtons, either. No, they're carved out at luxury property expos in Singapore or Dubai. “They'll land on the helipad and be ushered straight into a private marketing suite,” he tells me. “They'll drink champagne and be presented with 3D models and scale drawings and watch a beautiful presentation by big British developers like Ballymore or St James. They'll sell around 30 per cent of a development immediately. By the time the building has finished, I would say at least 85 per cent would be sold.”

Last year Mayor Boris Johnson told the world that “London is to the billionaire as the jungles of Sumatra are to the orangutans... it's their natural habitat.” A better analogy would be if Sumatra's orangutans just owned all the tallest trees on the Indonesian island but lived in neighbouring Borneo, returning for one month a year to eat all the best fruit and defecate on the jungle floor.

Words by Matt Blake