Property Lottery: How I’d Spend my Winnings

Philip Eastwood, Partner and Head of London for The Buying Solution, reveals how he’d spend his lottery winnings.

You’ve won the Euro lottery! Your wealth advisor has recommended how much you should put away to pay for necessary and important elements such as pensions, investments, charitable donations and children’s education. They have allocated €25m (approximately £21.9m) of the remaining pot to invest in property. What would you buy?

If the adage holds true that winning the lottery should be a life changing experience, I intend it to do just that. It wouldn’t be just about finding the nicest house in my favourite London street, I’d also keep a strong eye out for a good investment, too. It’s an amazing piece of luck to win such a huge amount if one can make further capital on it that surely must be a good thing.

Currently on the market there are a number of classic, white stucco-fronted houses in Belgravia’s Chester Square. The most attractive of three garden squares built by the Grosvenor family when they developed the main part of Belgravia in the 19th century, and once home to Margaret Thatcher, it’s widely regarded as one of the premier addresses in London. Almost all the houses have listed status that prevents any external modifications and all owners—freehold or otherwise—have to comply with the Grosvenor Estate’s rules, which preclude that all front doors should be painted black, among other things.

As they are typically owned by extremely wealthy investors from overseas, the interiors of these houses—which can have six or 7 bedroom suites–are often finished to the finest details and I imagine not having to spend anything internally. Standard features might include an internal lift, parking for three cars, a wine cellar with maybe a humidor, a fully-equipped gym with Jacuzzi, and all the book-matched marble bathrooms that one could wish for. With asking prices of around £20m to £25m, would-be buyers might be surprised to hear that there is little or no garden and outside space comes in the form of terraces instead. Don’t forget that residents automatically have access to the private communal garden which is just under 1.5 acres.

For me, the fact that they are a number of them available currently means that there might be an opportunity to drive the price down—it’s a case of supply and demand. The location is fantastic and is never going to be compromised so this would, from a strategic standpoint, be a good buy. While the market might be a bit soft at the moment, an investment at this level into this platinum-rated address means that even if the property hasn’t appreciated in value in 4 or 5 years, at least the investment is safeguarded until it does–and it will.

Time and again, during my career, I’ve listened to property professionals lamenting that they didn’t buy a house at a certain time in the market. For that reason and because interest in these very expensive houses in Chester Square is currently low, I see this as an opportunity. This is about buying well and wisely—not about letting the heart rule the head. It gives the opportunity to buy now, take advantage of the weaker prices and then be in a position down the line to capitalise on this great windfall that lady luck has bestowed on me.

TBS in The Telegraph – How the super-rich customise their homes in 2018

Solid gold taps and a slide from the bed…..Wealthy buyers desire to take bespoke homes to the extreme.

They want homes homes fully personalised with status symbols that no one else can replicate.

Read Zoe Dare-Hall’s full article for Mark Lawson’s comment:
How the super-rich customise their homes in 2018 | The Telegraph

 

What does the future hold for regional farms in the current and post-Brexit era?

In the market for farms and estates, there is quite a distinction between the two different prospects. The classic “country estate” has a large, attractive house set in gardens and parkland and several hundred acres of amenity land or farmland. While what we term a “regional farm” is a working farm with the same amount of land but a less spectacular farmhouse and workaday agricultural buildings. Here, we are considering the impact of Brexit on “regional farms” as opposed to rural estates.

Typically, regional farms in the golden counties of Gloucestershire, Wiltshire, Hampshire, Berkshire and Surrey, are likely to be worth a considerable amount more than one found in areas further away from London or less sexy countryside. The reason is simple: they are more likely to attract wealthy lifestyle buyers wanting to convert the farm into their country seat and, better still, if they neighbour existing estates whose owners might be interested in expanding.

The value of farms that fall outside of this “hot zone” — bare arable fields that are typical of farms in East Anglia or less accessible dairy farms in the West Country — will already be less and with the looming changes to the way subsidies are paid as we leave the Common Agricultural Policy, those values could fall considerably.

Farmers, who make up the majority of the buyers of these regional farms, will be looking to see a yield from every acre they acquire. But how can anyone put a value on these acres in this current climate? A high percentage of current profit for farmers comes from the subsidy payments: in 2015, farmers received £3bn in direct payments from Brussels. Currently, farmers are set to receive the existing subsidy rate until 2022. But are these levels of subsidy going to be sustainable when competing against other Government expenditure such as the NHS and schools?

Further, very large and wealthy farms — those well in excess of 1,000 acres — are likely to be somewhat cushioned as they are in a position to lower labour input costs and continue to invest in the latest machinery to keep competitive.

Small and medium sized farms of between 100 and 800 acres, or those with excessive debt, however, are unlikely to have the financial ability to modernise to compete in an environment which isn’t so heavily subsidised. Added to which, the Government has already said that farmers will be rewarded for planting woodland, boosting wildlife, improving water quality and recreating wildflower meadows. That benefits amenity farm owners but less so for working farmers who need to work every acre they can to keep afloat.

Owners of these regional farms might want to consider what the future holds for them beyond 2022. If they decide to throw in the towel and sell up, they may not be alone–and this might get quite uncomfortable in the areas that do not attract the rich weekender.

This may sound depressing but spare a thought for tenant farmers who are trying to survive whilst also paying a rent.

London values: why nothing is guaranteed

According to Knight Frank’s Luxury Investment Index, luxury watches went up in value by 5% over the 12 months to October 2017 and by 69% in the period between 2007 and 2017. These figures clearly suggest that luxury watches are a sound investment but personal experience tells me it’s not always so clear cut.

Ten years ago, I bought two watches from watchfinder.co.uk—a specialist online dealer for pre-owned luxury watches. The first was a Rolex GMT-master. One of the most successful lines ever produced by Rolex, it was made for Pan-Am Airlines after the company requested a reliable watch that could display more than one time zone at once—ideal for their pilots making trans-Atlantic or long haul flights. It was designed in the colours of PanAm and soon became a watch for wealthy members of society who frequently travelled; later it became a collector’s item.

The other was an Explorer II. This watch, also by Rolex, was first released in 1971, and also aimed at world travellers, it was an evolution of the original watch which Hillary used during his ascent of Everest.

Both watches cost me approximately the same amount of money and were bought at the same time. Both are built using identical mechanisms and are of the same size. The main point of difference is their face: one is black and the other white.

Recently, after some encouragement from my wife whose view is that we only need one wristwatch, I sold both of the watches. The results differed vastly: the Explorer II barely covered what I’d paid for it back in 2008 while the GMT tripled in value. What is it that has made that GMT soar in value? There can be only one answer: fashion.

In the same way that the value of watches can vary enormously between styles, the same is true of property. Indexes which track the value of luxury items often have a very blanket approach which obscures discrepancies. The same can be said of indexes which are produced by almost every leading estate agent and mortgage lender in the country. Of course, every buyer—even more so relevant to the top end of the prime central London market—wants to know that their investment is sound and will deliver a return. However, what no expert (or salesmen) can possibly predict is how a property or an area will be impacted by environmental, lifestyle or fashion changes 10 years down the line.

The moral of the story is that you can’t be too scientific when it comes to buying a property. The yardstick used most frequently to value a property today in London is by its price per square foot. At best, it’s a rather crude tool and doesn’t bring into the equation other aspects that might affect the enjoyment of the property including its position, its condition or the size of outdoor space, among other elements. Part of our role at The Buying Solution is to use our years of expertise to factor in these elements and advise our clients accordingly.

Yet, at the end of the day, no one has a crystal ball and no one can predict whether an investment will deliver an exact return. Far better, therefore, to buy sensibly, and armed with all the finest due diligence available, but also with the heart. When I think back to the purchase, I preferred the GMT-master out of the two watches but was persuaded by the salesman that Rolexes are always a safe investment. If only I’d followed my instinct and bought half a dozen GMT-masters!

The Cotswolds Value Gap

As Jonathan Bramwell explains in this week’s Country Life magazine, a significant value gap has opened up between property prices in the north Cotswolds and the south Cotswolds—particularly at the top end of the market. Using the A40 as the dividing line separating the two regions, a classic, seven-bedroom country house with stables, ancillary accommodation set in 50 acres might cost between £4m and £6m in the south, but that price can rise to as much as £6m to £10m in the north.

The popularity of the north Cotswolds and upward pressure on house prices began to take off in earnest in the beginning of the 2000s when City financiers and hedgefunders ‘discovered’ Notting Hill. For them, the easy drive down the A40/M40 to Oxford, Chipping Norton and its environs encouraged those in search of a weekend retreat to settle there–especially after the opening of Lady Bamford’s upmarket farm shop, Daylesford Organic, in 2002.

Complimenting that was the soaring popularity of the Oxford schools as an alternative to educating children in the Capital—chief among them, the Dragon School. That coupled with the fall from fashion of full-boarding at prep school encouraged more buyers to find somewhere in the local vicinity. As a result, both the average age and profile of buyers changed and moved away from those interested in country sports and more towards families with young children wanting access to good schools, gastropubs, shops, music festivals and beautiful countryside.

Another key factor has been the improved train times along the Chiltern line which has considerably reduced travel times to London Marylebone from Banbury and Bicester. The fact that you can now do this journey in under an hour proves extremely attractive to City commuters. Added to that has been the opening of the spur line which connects Oxford (including the new Oxford Parkway station) and Bicester Village to the Chiltern mainline. This gives the added advantage of choice for commuters to travel either into Marylebone or Paddington via Oxford, Charlbury and Kingham.

As a result of this improved connectivity, the popularity of the north Cotswolds grows  and it was given an extra boost by the opening of the private members’ club Soho Farmhouse at Great Tew in 2016. For many of our buyers it ticks all the boxes, but for others the high prices are making them consider other options.

Cheltenham, at the western edge of the Cotswolds Area of Outstanding Natural Beauty, is an excellent alternative schooling hub to Oxford. The attractive Regency town is currently undergoing a considerable transformation with the upcoming opening of the new John Lewis store, the new Ivy restaurant and several million being spent on improving the town centre. Additionally, the town has a packed annual calendar of sporting and cultural events and festivals, attractive housing stock and less exposure to tourism than Oxford.

Figures from the local Knight Frank office gathered by our Cheltenham specialist, Charlotte Dover, reveal that the average price in the town’s most desirable areas ranges from between £400 and £500 per sq ft. Equivalent prime areas of central north Oxford are twice as expensive. That means it is possible to trade a good-sized London house for a family house in Cheltenham and have a substantial amount of change to spend on other things such as the children’s education.

As regional cities and airports such as Bristol and Birmingham grow, we believe that Cheltenham will become even more attractive to buyers—especially those who don’t need to be in London five days a week. While its rail access to London is unlikely ever to radically improve (it’s a 2hr train journey to Paddington) it’s well located by road and rail to Gloucester, Bristol, Worcester and Birmingham.

For those looking for a more rural lifestyle, the southern region of the Cotswolds has tended to attract more buyers with equestrian or polo interests with Cirencester Polo Club and Beaufort Polo Club on the doorstep, as well eventing at Badminton and Gatcombe Park. It also has popular prep schools including Pinewood and Beaudesert as well as access to Marlborough College, Westonbirt, St Mary’s Calne and the Cheltenham schools (Cheltenham Ladies’ College, Cheltenham College and Dean Close). Tetbury is an attractive town for antique shops and Cirencester continues to expand. Meanwhile, for commuters, Kemble station is another big draw as fast trains are only 1h20mins to London Paddington. There are rumours that this will soon be closer to 1 hour following the electrification of this line.

Like the north, the south Cotswolds has beautiful countryside with the additional attraction of the Cotswold Water Park for those who interested in water sports. There are fewer gastropubs in this area but the likes of Calcot Manor, Barnsley House and Thyme at Southrop and Cowley Manor offer good alternatives to Daylesford and Soho Farmhouse.

What currently remains true of both Cotswolds regions is a long-term shortage of supply of houses coming to the market. Best in class continue to sell quickly and often off market: a recent sale of an edge-of-village house near Northleach has just gone under offer at over 25% of its guide price of £2.25m. Therefore, be prepared for competition if buying in either the north or the south.