It is easy to pass by the relatively dull façade of One Hyde Park, a condominium of 86 flats located in the exclusive London neighborhood of Knightsbridge. Inside, though, the property is tantalizing, with communal spas, a private wine-tasting facility, an underground tunnel to a swanky restaurant nearby, rotating paintings-to -television screens, cameras that help residents check for dandruff on their backs, and security features such as bullet-proof windows and iris scanners. In fact, One Hyde Park has the distinction of housing arguably the world’s most expensive flat — a $212-million, two-floor penthouse perched atop one of its four blocks.
One Hyde Park is also a much sought-after “safe haven.”
Indeed, this residential development, where flats have been selling for $30 million on average, has become the poster child for the hundreds of prime London properties whose prices have skyrocketed in recent quarters due to investors’ belief that they are a safe investment amid the problems in Europe. The ultra rich from countries such as Greece and Italy have been worried about the health of their banks and the prospects of the euro as a single currency. With this, as the German publication Spiegel Online has reported, Greeks have withdrawn a fifth of their total bank deposits, or about $69 billion, since the beginning of their country’s debt crisis and Italian investors moved $105 billion out of their country in August and September alone.
It appears now that a substantial portion of this capital might have found its way into London’s premium real estate market. After all, between January 2011 and November 2011, the Greek home buyers’ share of upmarket property deals in London swelled to 2.63% from 1.7% and Italian home buyers’ share increased to 2.63% from 1.9%, according to international property broker Knight Frank. Data released by the broker also indicate that between October 2010 and September 2011, foreign home buyers’ share of London property deals exceeding $3 million increased to 55% from 49% the year before. Needless to say, the frenetic buying has been steadily pushing up London prime property prices at a time when home prices in other parts of Britain have been on a downtrend. According to one Knight Frank estimate quoted in the Financial Times, London residential prices rose around 9% in the 11 months until December 2011, while homes in other parts of the U.K. lost an average value of $4,000 during the same period.
It is not as if spooked investors from Southern European countries have had only posh London properties to fall back upon. They have also been stashing their wealth in other real estate markets like Berlin and Paris, as well as in currencies such as the Swiss franc. But the premium London real estate market has stolen a march over its safe-haven peers for many reasons. The U.K. has a robust political climate, liberal financial market, relatively stable currency, and well-regulated property market. London too has its own set of attractions, namely its cosmopolitan character, excellent educational institutions, and global standing as a travel and tourism hub. What’s more, the British government has been going out of its way to welcome well-heeled immigrants into the country. For instance, the British Home Office recently opened a visa route through which foreign nationals can reside in the U.K. by investing more than a million pounds in the country. On this visa route, they are not even required to speak English. Not surprisingly, therefore, expensive London homes have turned out to be the biggest beneficiary of the crisis in Europe.
Incidentally, it has been reported that besides its many security features, One Hyde Park has a panic room so sophisticated that it is perhaps the world’s most expensive. This may or may not be true, but there is one thing for certain: London is Europe’s largest panic room today.
Postcards from Around the World
Subscribe to get our global publications by email.