NVP enjoys record-breaking year as Knightsbridge market turns a corner
By Patrick Alvarado, director of Nicolas Van Patrick
Despite a turbulent few weeks with the mini-Budget the latest in a long line of events to disrupt the housing market, NVP is on target to have our best year ever!
Since setting up the company in 2014 much has been thrown at us – stamp duty increases, the back and forth over Brexit, Covid, the war in Ukraine and five prime ministers. The normal sales model hasn’t been there, making for an exceptionally difficult and challenging market. But finally, we can say all the hard work and dedication has been worthwhile as we’ve made some incredible acquisitions on behalf of clients.
We have also been able to work the market to our advantage following an internal restructure and made some significant sales in Knightsbridge Village. We have focused on good old-fashioned agency, qualifying applicants, establishing which are strong buyers and keeping in regular contact with them. As a company we are now in that sweet spot where our people know what they need to do and like what they are doing. Nic and I have seen difficult markets throughout our careers and while they mean less volume, they give you more time to work what is there. To place transactions well in difficult markets needs a combination of hard work and instinct.
We find ourselves in a position where we are posting a good profit and are excited about next year even as the wider economic situation is precarious. We have been true to ourselves, and it has paid off. Although we are a boutique agency, we have over £30m of deals we are expecting to tie up by the end of November, while I personally am on track to do £100m of sales and acquisitions by the end of the year – a personal best!
Knightsbridge represents best value in PCL
Unfortunately for us Knightsbridge started losing its sheen eight years ago, about the same time as we opened our business. The property market in Knightsbridge therefore has not had the same buoyancy as other parts of PCL. Covid has also meant that international buyers are not around; indeed, the Chinese for the most part still can’t get here. Sales have been driven by Middle Eastern clients, particularly Saudi and UAE, who remain keen to invest and take advantage of the sterling/dollar exchange rate. We have been working with these clients for a long time and while there have been many disappointments along the way we have kept at it. It’s particularly pleasing to see that hard work being rewarded with good revenues.
We believe Knightsbridge is on the up once more and regaining some of its lost shine. Some may still feel that Knightsbridge is ‘too Middle Eastern’ and has been for sale to the highest bidder since the heyday of the launch of One Hyde Park. It hasn’t helped that we don’t have one main landowner like Cadogan or Grosvenor who are sensitively reinvesting in their estates which helps to underpin their intrinsic value. But there is so much more to Knightsbridge than a small section of the Brompton Road. For those looking to buy in PCL, Knightsbridge has everything on its doorstep; Harrods plus many other luxury stores from Sloane Street to Brompton Cross. It is close to the royal parks, has great schools and the best-value properties in PCL. One client recently told us that he felt Chelsea is too expensive, the condition of the properties is not great and the gardens are non-existent at a certain level. You can buy a similar house in Knightsbridge as you could in Chelsea for circa £1,600 a square foot compared with £2,000-plus a square foot in Chelsea.
The biggest impact a vendor makes is when they launch their property; if you come to the market at an ‘aspirational price’ you lose your best opportunity and may have to wait months or even years to sell. Some agents value high in order to get the instruction before working on it for a long time and then eventually reducing the price. We often find ourselves having to come to the market at a higher price than our initial valuation simply because clients want to work with NVP but at a greater price based on higher valuations they have received from other agents. This results in a much more protracted process. This is particularly the case in PCL where the market is so mature and there are so many data points via the portals and of course someone who knows someone in property, as well as most clients having advisers to guide them.
There is much talk of an impending UK wide house price correction. However, we feel this is much more applicable to the country market which has seen its sharpest growth in many years which has plateaued since pre-Covid.
Discretionary buyers who don’t need to purchase but would like an asset in London or want to take advantage of the exchange rate make up a big part of our market. They will transact on best-in-class or if something reflects true or discounted value. We are receiving many calls from buyers based in countries with currencies pegged to the dollar who are looking to take advantage of the current exchange rate, yet remain confident on sterling’s ability to recover. While the currency has moved in favour of dollar buyers this does not mean they are willing to pay the prices that are being asked. In their minds, the favourable exchange rate simply mitigates against the onerous 17 per cent stamp duty they have to pay, bearing in mind many of our buyers are both non UK-residents and own a second home. Case in point being a recent transaction with a first-time UK buyer who was spending £15 million in cash on a house and thought he was ‘au fait’ with the stamp duty he would have to pay, but had not allowed for the extra 5 per cent applied to every tier due to him being a non-resident and a secondary homeowner.
The only exception to all this are trophy best-in-class assets which are few and far between. £10m is something of an ordinary budget in PCL and will still require some compromise from buyers with regard to their ‘wish lists’. Knightsbridge houses are often smaller, taller or narrower compared with what many buyers at this level are used to. Special, wide or double-fronted properties with parking, good-sized gardens and which back onto a communal garden will easily cost north of £20m.
A happy 2023?
As 2022 comes to a close we find that Christmas is a good time to transact as many vendors want to draw a line on the year having tried to sell over many months. Those looking to sell this year don’t have long to do so; otherwise, the chances are that they will have the long wait until Spring.
We are cautiously optimistic about 2023 and what it may bring – having seen many ups and downs over the years we trust in the resilience of PCL.