My mother-in-law came for lunch on Sunday.
She was reminiscing about her youth and the various places she lived when she was in London in the 1960’s. One of these was 34 Montpelier Walk which is a three minutes stroll from Harrods.
She and a few friends rented the three bedroom house for £16 per week. That’s £16 per week in total – not each. So, if one used a 5% yield (about double today’s return), the house would have been worth £16,640.
I have checked my records on the house and in 1999 it sold for £715,000 (the house was 1238 sq.ft.). What do you think the owner of the house would have said in the 1960’s if you had told him/her that it would have gone up 43 times in value in 35 years? I expect that he/she would have assumed that you had received a blow to the head.
The house sold again in 2018. By this time, it had been extended to 1502 sq.ft. and updated further – it was bought for £3.2m or a rather more modest increase of 4.5 times the value from 1999. But what do you think the owner of the house in 1999 would have thought if you had suggested back then that the house would be worth over £3m now?
Again, your sanity would have been questioned, especially if you had suggested it in 2001 after we had had the dotcom crash, recession and the horror of 9/11.
And by the way, the house would have cost under £200 to build in the 1820’s. Indeed, the street was originally called Montpelier Row and this extract from the Survey of London gives you a flavour for Knightsbridge of the time:
“Early Victorian occupants of the Row included artisans, labourers, servants, sailors, soldiers, musicians, dressmakers, and laundresses; a similar pattern held throughout the rest of the reign. Several houses were let as apartments by the 1860s if not earlier. Inhabitants were overwhelmingly English, the few foreigners being mostly lodgers. They included (in 1871) a French actress, a Stockholm-born family of milliners and a couple of Italians – a tailor and a print-seller; and (in 1881) two German bakers and a French chef.” Source: british-history.ac.uk/survey-london/vol45/pp116-124
It would appear the demographic has changed ever so slightly over the years, no doubt with each generation claiming that prices could not go higher, even though history has proven otherwise - despite wars, political parties of varying incompetence and various financial calamities, property prices have increased to levels that always seem implausible if not impossible.
The press and conventional wisdom will tell you that prices can’t go higher now. They have been saying this for centuries. Do you want to believe the talking heads who have not studied the history of the property market or do you want to look at the facts and make an informed decision?
The musicians, laundresses and servants were replaced by white collar workers, who in turn were displaced by wealthier professionals, who in turn have been replaced by bankers and wealthy international buyers.
At is simplest level, prime London property reflects what is happening to global money supply. It is much harder to make land than it is to make (or print) more money. It is even harder to create cities and resorts with incredible amenities.
This is why the best locations outperform – not only cities like London and New York, but resorts like Aspen, Val d’Isere and the south of France. Of course, there are periods when these areas will underperform but the periods of outperformance dwarf them.
So, when you consider that more people are making more money in more jurisdictions and at a faster rate than ever before, do you think that Knightsbridge and London in general is going to become less popular?
“But what about the current threats?” I hear you ask.
Well simply email firstname.lastname@example.org to let us know what particularly concerns you or any questions you have and we’ll answer them for you.
Who am I and why should you listen to me?
My name is Jeremy McGivern. I am the founder of Mercury Homesearch, the internationally renowned property search consultancy, and author of The Insider’s Guide To Acquiring Luxury Property in Prime Central London. I have been acquiring property in prime central London for clients for over 13 years.
Having physically viewed over 22,000 properties in prime central London, studied the details of over 153,400 apartments, houses and investment opportunities and spoken to 232+ estate agents every week for over a decade, my advice is in high demand and has featured everywhere from Bloomberg Television, The Financial Times and The Daily Telegraph to Forbes India and Bahrain Confidential.
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