UK: London sees an unprecedented migration of the ultra rich to the capital

Business sectors such as art dealers, real estate agents and luxury goods suppliers report difficulties in satisfying increasing demand created by a growing number of wealthy Londoners. They are shiny, even under London's grey sky.. the latest luxury cars at a showroom in London's wealthy Mayfair borough. One of them - the Rolls-Royce 'Phantom' model - has been on sale for only a month. It is yours if you want it, for a mere 325,000 pounds (approximately 653,000 us dollars). But according to the car dealers, having the cash flow is not enough. Like many other luxury goods, demand exceeds supply and the lucky buyer will have to wait up to three years before they - or their chauffeur - will put their hands on the wheel. "Well 2007 has been an absolutely astonishing year I think for all luxury goods. First of all the inflow of people from outside the U.K has made a huge contribution towards the level of business," Nicholas Lancaster, chief executive at HR Owen car dealership, said last week (August 17). Long a hub for the World's super rich, businesses across London report an unprecedented increase in sales: from houses, to luxury goods, to auctioned art works. For instance, this Bugatti 'Veyron' model is on sale for almost 600,000 pounds (1.2 m us dollars). According to Lancaster, the market is not confined to locals: "We used to say that there is old and new money, now there is nearly all new money", He says, "and of course London is a big financial centre, and as such it's attracting more and more people. There are tremendous tax benefits for people to domicile companies here and as a result of that and with the growth of the financial centre we have seen an enormous increase in the business". With a population of nearly 8,000,000 people and millions more who come to the city to work or visit, London has long been a commercial and a financial hub. A combination of factors, among them the United Kingdom's location between business centres in Asia, the Middle East and the United States, a liberal taxation policy and no language barriers, have long attracted foreigners to base themselves in the city. Estate agents in the city say foreigners now make up a crucial part of the real estate market, with top-end property prices rising by 30 or even 40 percent compared to last year. "18 months ago the target for developers in central London was about 2,000 pounds square foot in terms of sale values. That has been broken easily in the last 12 months and actually developers are now pushing towards 3000 and even 4000 plus per square foot in central London," says Liam Bailey, head of residential research at Knight Frank estate agents. On display at the agency's Mayfair office are flats on sale for millions of pounds. Catering to their clients' needs, Knight Frank employs Russian speaking agents and offers translated information brochures. "At the top end of the market, Russian buyers account for about 1 in five in all property transactions above 5 million pounds," says Bailey. "Aside from Russians we also see European buyers, Middle East buyers and Asian" he adds. At the end of a successful week at work, what could be nicer than boarding a private jet and heading towards a break in the sun. At London's city airport, pilots prepare a Hawker 800XPC for take off. It belongs to 'Netjets' - Europe's largest private jet company, and offers passengers a luxury flight on leather seats with a menu to cater for all their gastronomic whims. Netjets, with 130 aircraft in Europe alone, flies its wealthy customers across the globe. A minimum of 25 hours of flight can be purchased for 129,000 euros (approximately 176,000 us dollars) and according to Robert Dranitzke, director of marketing, communications and social responsibility at Netjets, the demand for such services is increasing rapidly. According to Dranitzke, the most frequent route for Netjets' fleet is London to Paris. He agrees that London is more attractive than ever before. "It's a great place for them to set up, and then the government and the regulatory regime is obviously set up in such a way that is an appealing place to run your business, and then the tax status also helps to attract the top wealth, you know the top money makers from around the world, and it's a well-run city, it's a great place to live, and I think we will continue to see London, London grow and become a strong business centre for the globe," says Dranitzke. Can the trend go on forever? Some analysts say the disadvantages are about to become more and more evident. "On the down side, there is a certainty that house prices will be a bit higher than otherwise they would have been", says Tony Travers, director of the Greater London Group and the London School of economics and political science, "and also a risk that the gap between the very rich and everybody else, particularly the very rich and the very poor, will be so wide that this could produce an angry lack of harmony in society and that could produce pressure for political change," he adds. But as they take off on board a luxury private jet, the ultra rich leave these problems far, far behind.

ITN Source | September 2, 2007

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