July 16, 2014
A Tale Of Two Cities
London 2014. The visitor to the UK’s capital will see all the famous sites that have adorned millions of objects, from jigsaws through Monopoly boards to chocolate boxes. Buck Pal, Trafalgar Square, the Houses of Parliament, Tower of London, the royal parks, British Museum, the list is endless. But, as in any city, the real London – that giant metropolis of 10 million people – holds its secrets tightly. Those who live and work there know a different London, ten million different Londons perhaps, and their individual experiences of “their” home city will be colored by where they fit into the capital’s many levels. At one extreme, there are the dramatic increases in homelessness, overcrowding, poverty and social deprivation. The casual visitor is unlikely to catch more than a glimpse of this world. The tourist spots are sanitized of such sights. Equally, there is a mega-wealthy London, which is just as invisible.
Although the best predictions are that in the not too distant future, Asian cities will steal its crown, London has once again been confirmed as the city of choice for the super-rich ahead of New York. One London street epitomizes this trend. Egerton Crescent in Kensington and Chelsea is flaunted as London’s richest thoroughfare. Houses on this exclusive street bring an average of £5m (over $8 million USD) on the housing market. House prices in London have been rising dramatically for several years with no sign of slowing down. The bubble keeps inflating and it all appears to be down to the influx of “UHNWIs” – the world’s richest “ultra high net worth individuals.” Anyone can join this club. There is only one necessary condition for membership. You need to have £21m in assets, which do not include the value of your main home.
According to Knight Frank, the UK upmarket estate agents, the number of UHNWIs worldwide rose by 59 percent in the decade leading up to 2013 to 167,669, which is roughly the same as the population of Kensington and Chelsea. They haven’t all moved there yet – it just seems to feel like it – and over 4,000 have already bought up chunks of London real estate. These people control assets amounting to over $20 trillion USD. The combined outputs of the US and Germany don’t add up to that much.
Asian wealth and, increasingly, that from Russia represent the main source of new money flooding into London, and many people are seeking to reassign their domicile to the UK, a move that brings a lot of tax advantages. It’s bad news for the average Londoner who sees house prices in general becoming unaffordable, but great news for those who get the spin-offs from such vast amounts of money – the jewellers, the estate agents, the purveyors of fine art, wine merchants, the private bankers, sellers of the “superyacht” (defined as a yacht over 60 meters in length), private jets, and the luxury car salesrooms. Even the great expanse of display windows that front London’s most famous store, Harrods, now has a section devoted to top of the range cars.
For now, London and New York are still the “go to choice” cities for the UHNWIs and are comfortably ahead of the pack, but Singapore and Hong Kong are closing the gap every year.
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