Reasons to be Cheerful
As we finally embark on 2021, after a pretty wretched 2020, we are feeling rather more hopeful for the year to come. Even though we have now entered another national lockdown we are extremely thankful that, as estate agents, we can continue to operate, particularly as business has been relatively good recently. In the three weeks leading up to Christmas we managed to exchange on seven properties across two deals – no mean feat when you consider that Knightsbridge was already in Tier 4, along with the rest of the capital, and both buyers bought blind without viewing.
Unusually for us, given that we are mostly known for selling Knightsbridge property, these deals were both purchases on behalf of clients. The first was a house with a triple-A address in Ennismore Mews. Originally marketed at £3.6m, it hadn’t seen much activity so the seller was advised by his agent to lower the price to £3m. This generated interest and our client, an American who knew the address and recognised a great mews on a great street, ended up offering £250k more than the reduced price. If a property looks fair, or good, value in a triple-A address, then there will be those prepared to do that deal.
The other purchase was of six flats in one house in Hans Place, SW1 – again, for a Saudi client who hadn’t seen them as he is based in the Middle East and not able to travel because of the pandemic. He paid just over £11m, working out at just over £1,500 a square foot. He knew he was getting good value with a yield of above 3 per cent, and was prepared to buy blind, and move quickly, because of that. Tellingly, our offer wasn’t the highest – there was another offer on the table which was £750,000 higher – but if you are value-driven you need to have all your ducks in a row. We were able to back up our offer with proof of funds (in cash), a solicitor able to confirm instruction and a 10 per cent deposit lodged with the solicitor within a week.
Both deals confirm what we always say at NVP – that you can never undersell if you market something correctly. To sell in this market you have to be realistic. There are so many data points that buyers know when something looks good value – and equally, when it doesn’t. These sales also show that the end of the year is a good time to step in and do a deal. Vendors may well have become fed up with a property that has languished on the market all year and want to start the new year with a clean slate.
A theme we are repeatedly hearing is that clients, who may be in the fortunate position of sitting on a lot of cash, would prefer to invest that money in tangible assets such as property. Banks will only protect your savings to a certain level, while the other advantage of bricks and mortar is you may also get a good yield, depending on where you invest.
The prime and country markets enjoyed record results last year – PCL is very different as it is reliant on foreign money. If anything, the pandemic has proved that more than ever. But there is still a strong belief in London in the long term and many clients want at least one home in the capital. We have clients looking for family homes in Knightsbridge, Mayfair and Belgravia with a garden in the £15m to £20m bracket – these are buyers who are obviously clued up and still want to invest in London.
With a Brexit deal finally agreed, and given that property prices in PCL have gone nowhere in the past six years, London is looking fair value and hopefully a more stable place to invest in the long term. We saw early signs of a willingness to buy following the Boris Bounce, before Covid hit and international travel halted. With the extra 2 per cent stamp duty coming in for non-residents in April, we could see a pick-up in activity before then.
Despite the pandemic having thrown another spanner in the works, we hope for an uptick in activity from March onwards, if travel returns; if not, it will happen by the summer. But the main thing to focus on, of course, is that the vaccines are here and we are not in the position we were in earlier last year. That is certainly something to be grateful for.