Luxury London Property Investment Strategies – The Cash Buyers Choice
You are flush with cash and looking for a good investment. A nice place to park you cash that will yield a nice return and be backed by a true asset. The one asset you can invest in and truly enjoy while it is earning you a nice yield is real estate, specifically luxury real estate in London.
Why London?
Simple. London has produced an average return of 7% per annum during the last 30 years. That is a much better return on investment when compared to other low risk investments such as bonds or money markets. And when was the last time you took a vacation to your bond? The 7% annum does not take into consideration letting the property for special events or as a vacation lease. When factoring in these options the returns per annum can be significantly higher. If you are only planning on utilizing the property a month or two out of the year it only makes sense to lease it out during the times you are not there.
Why luxury real estate? There is only a finite amount of luxury real estate in London. While more and more luxury real estate is being developed it is not keeping up with demand. Simple economics tell you that when demand is high and supply is low prices increase. And this is exactly what is happening with London UK luxury real estate market. However, what you need to keep in mind is that there is really only a couple of areas in London that are considered “luxury areas”. These areas are Knightsbridge and Belgravia. Kensington Place Gardens and The Boltons are smaller areas that offer high end luxury real estate as well. There is only so much land in these areas and it has all been developed for generations. While there are some up and coming markets. The previous areas will always be the ultimate in luxury living.
Cash is king! Once you start getting into the higher end of the luxury real estate market you need to be aware that cash is king. For the most part sellers will not take you seriously if you are needing to mortgage that property. Secondly, you will need to find the right bank willing to loan millions of pounds on a single property. You will be put through the ringer as far as qualifications and proving assets. All around it is just easier to pay cash for the property.
Finding the right property to invest in is the biggest key to investing in luxury property. The best key to unlock the treasure box is by finding a luxury real estate agent. Now, be careful with this as there are all kinds of real estate agents that call themselves luxury real estate agents but do not have the experience in selling luxury real estate or dealing with luxury real estate buyers. Your best bet is to ask friends, associates and business contacts for a referral. The other reason you need to work with an agent that specializes in this market is because once you hit the high end of the market, between 25 to 50 million a, the sellers are much more discreet about their home being on the market. There are several reasons for this which may include lawsuits, gossip and burglary. If an agent is not networked with other agents in this market you will not find the real gems hidden amongst the heavily marketed pieces of real estate.
Realistically the luxury real estate market begins at the 2 million pound mark. The reason for this number is that this is where the stamp tax begins. You can expect to pay a 15% stamp tax on any real estate at that value or above. London is one of the top spots for international real estate buyers. 70% of real estate is sold to international concerns and 30% of the luxury market is sold to international investors. In an effort to slow down the housing market investments made by international real estate investors the government imposed this stamp tax. However, most real estate firms and studies have noted that this has done little to slow the amount of investor pouring into London.
One final thing to consider as to why you should consider investing in London luxury real estate is that London has recently passed New York city as the world’s number one spot for international real estate investments. There are very few signs of the real estate market slowing down in the new future regardless of the tax increases the government tries to impose.