"Well," I say brightly, “if you can’t get it away as a house, you
could always market it as a hotel.”
Andrew Silver, the developer, looks at me in a manner best described as
tight-lipped. He is giving me a tour around his latest project, Jersey
House, a £40m, 20,000 sq ft trophy home situated at the top – that is, the
extremely expensive – end of the Bishops Avenue, in Hampstead, one of the
most expensive roads in London.
The eight-bedroom home (not including the staff accommodation) is
ostentatious, cost a fortune to build and will advertise the unseemly wealth
of anyone who buys it. Take the basement, with its 33 ft heated pool, gym,
steam room and sauna, or the top floor, where giant bedrooms with ensuite
bathrooms and hand-woven silk carpets costing almost £50 per sq ft overlook
an acre’s worth of verdant lawn, topiary and manicured garden.
That’s not to mention the stone floors, the parquet floors, the lights that
can be remote-controlled from your yacht, the giant glass chandelier by
Bruce Munro in the double-height entrance hall – and the fact that the
catering kitchen can knock out dinner for up to 250 people.
Yet any way you look at it, Jersey House – whose style would like to be
loosely related to English Arts and Crafts, but is more akin to the
contemporary style of international bling – has probably arrived at the
wrong time. After months in which it seemed immune to the collapse of the
mainstream property market, the top end is now also in trouble.
The estate agent Knight Frank says the price of prime property in central
London fell by 3.9% on average in October, the fastest rate of decline on
record. That’s about £5,000 a day on a £4m house – or 13.4% below its peak,
reached in March.
“Price falls began in earnest in March,” says Liam Bailey, the agency’s head
of residential research. “We do not expect the market to bounce back any
time soon, but the indications are that cutting prices to sensible levels
gives you a half-decent chance of achieving a sale.”
Is Silver worried? “Perhaps,” he says, pausing as we enter the female dressing
room that adjoins the master bedroom, which is scented with vanilla, adorned
with pop-out mirrors and furnished with built-in cupboards fashioned in
pickled sycamore. “Perhaps the luxury-house market is drawing breath at the
moment.”
We venture into the ensuite bathroom, which is entirely clad in pink marble.
Above the bath, there is a plasma-screen tele-vision (as in all the
bathrooms), so one can watch dire news from the markets even when one is in
the tub.
Silver says he bought the plot for Jersey House four years ago for £6.6m.
That, along with his fancy materials (think of all that silk carpet) and all
the labour, must mean he has ploughed quite a lot of money into the project.
“Well, I’m only about 33% geared,” he says. “And I always expected it would
take a year to sell.”
Jeremy Gee, who is in charge of the sale for Glentree Estates, a top-end
agency, is cautiously confident that the marble-clad floors, feature library
and leather-padded lift will have a new owner – even if it takes time.
“There is no doubt that the eastern European buyers on whom we have relied
in the past few years are thinner on the ground,” he says. “But we have two
parties who have already had second visits.”
So, are the super-rich, many of whom are super-smart, looking for a discount?
Will Silver have to go for a knockdown price? Gee doesn’t seem to think so.
“Our last two sales of similar trophy homes achieved £2,000 per sq ft, which
would mean £40m for a property the size of Jersey House. And we are seeking
offers in excess of that figure.” Gee does, however, concede that “it’s in
the nature of buyers to make an offer on the asking price, and they may use
the current climate as an excuse”.
Charles McDowell, a property agent based in Knightsbridge, is more overtly
gloomy. “People are saying the top end hasn’t been affected by the
downturn,” he says. “Actually, it was the last to be affected, but now it
might be the most affected, because it was the most inflated.”
His view is that with the exception of “Fabergé houses” – in other words, the
best of the best – trophy homes have been receiving a bit of a pounding.
“The property investors who would buy them, I mean people on City bonuses,
have had their wings clipped,” he says.
And what has happened to their nests? “Something in Kensington that was sold
last year for £7.5m has come back on the market for £6.75m,” McDowell says.
“Next year, we will see considerable discounts. In parts of the market, £10m
houses will become £6m houses.” Which parts? “Those inflated by
investor/banker types and those on City bonuses,” he says.
All of which does not bode well for the owners of the swanky townhouses
beloved of that formerly abundant but now almost extinct species, the bonus
buyer. Take an eight-bedroom Kensington townhouse with formal entertaining
space and a south-facing garden, on the market for £16.5m with Strutt &
Parker since August. Or 52 Bedford Square, a Grade I-listed, four-bedroom
Georgian terrace in Bloomsbury, central London, bought for £5m in December
2006, just as the first murmurings of a slowdown began. After a £3.5m
renovation, it is now for sale for £15m with Beauchamp Estates.
Jonathan Hewlett, head of the London region for Savills, has been trying to
shift a 10-bedroom, mansion in Mayfair, priced at £45m, since January. “The
whole market has been sitting on its hands since September,” he says. “When
Leh-mans fell, everyone’s eyes were looking at the financial markets. They
haven’t yet got back to focusing on property.”
Things have simply staggered to a halt. “It’s the attitude of the buyers,”
says Grant Alexson, partner and head of Knight Frank’s Hampstead office.
“Their perception is that the market is weak, so they are offering low
prices, but they are running into vendors who won’t sell at those prices.
There is a standoff.”
Interestingly, if money does start to flow again, the super-prime market might
be bucked up by the poor performance of sterling, as anyone working in
dollars might see London as a bit of a bargain. “Dollar-placed buyers now
have a 20% built-in discount,” Alexson says. “This is a double whammy for
international buyers, on top of prices coming down.”
Alexson has plenty of trophy properties on his books, among them Chesham
Place, an 8,000 sq ft flat in Belgravia, yours for £40m and an annual
service charge of £131,000 (020 7591 8600, www.knightfrank.com). He also has
a £20m number in St John’s Wood – the sale is hush-hush, but it has an
exceptionally swanky pool – and another giant seven-bedroom mansion on the
Bishops Avenue for £22m. Each of them has a sauna, an exotically tiled pool,
staff facilities, air con, double-height this and triple-layered that. They
probably have hand-woven silk loo roll – or could have, if you wished it.
So, will the sellers have to knock down the price? Not if Alexson can help it.
“The real market, by which I mean property owners wanting to sell, will ride
out the storm.”
In the meantime, I am back in the Poggenpohl “family” kitchen of Jersey House,
admiring yet another pop-up plasma screen. “The end of the world hasn’t
come,” Silver says. “You have to have the billionaires of this world, and
this house meets a demand.” Would he tolerate a discount on Jersey House?
“Let’s see where we are in 18 months’ time,” he replies.
Jersey House is for sale with Glentree Estates; 020 8458 7311, www.glentree.co.uk
