With competition for upmarket property stiff, some sellers are sweetening the deal with extras like cars and furniture.
One of the quickest ways to figure out the state of any property market is to look at prices, which generally drop when the market takes a downturn. It’s not, however, the only way to judge what's happening on the ground.
It's becoming clear that both sellers and the developers of upmarket properties around the UK are being forced to sweeten the deal by throwing in a couple of expensive extras in an effort to woo buyers. And it appears the more the property costs, the more the seller is willing to offer. In one case the seller of a £25-million (about R407-million ) Mayfair mansion offered to leave his £350 000 (approximately R5.7-million) Rolls Royce parked in the garage as part of the deal. The sweetener worked like a charm and the property was sold.
According to various estate agents, the use of sweeteners has become common practice in the super-prime market which has been hammered by both Brexit and stamp duty reforms. In one instance, furniture (including state-of-the-art-audio-visual equipment) worth some £400 000 (approximately R6.5-million) was included in a property selling for £9.5-million (about R154-million). Likewise, a company which transformed a row of Georgian town houses overlooking Hyde Park into luxury flats had to go to extreme lengths to garner interest by offering to fill the homes with £200 000 (about R3.2-million) worth of designer furniture.
The London market has always performed well regardless of the economy and one can't help but think that sellers and developers never envisioned having to spend extra money in order to convince buyers to invest. However expensive artwork, membership to exclusive gyms and some of London’s most elite clubs such as the Ritz as well as complimentary wine cellars are being handed out these days in order to seal the deal.
Fully furnished property is always going to be a drawcard for those who don't want to be saddled with sorting out the nit-picky details of property ownership but not everyone will be swayed by this option. This however doesn't mean that those buyers aren't demanding other incentives such as the payment of stamp duty, legal costs or annual service charges attached to the property being included in the deal. Those investing in the buy-to-let sector have also become more demanding in recent times, leading to developers offering guarantees on minimal rental income.
In a report published by The Telegraph, Michael Ferris, the property director whose firm JR Capital invests in UK property on behalf of wealthy clients from the Gulf, noted developers have had to grin and bear it over the last 18 months in order to finalise deals. “It’s been a buyers’ market,” he says, “so they have been able to ask for incentives.”
Savvy buyers are no doubt milking the situation for all it's worth and will continue to do so while the pound is on the back foot and the uncertainty surrounding Brexit remains. There are, however, signs that the market is beginning to turn and those who wish to cash in on the slump shouldn't delay buying for too long.
London-based estate agents are reporting that sales have picked up this year, mainly due to the weakened pound and add that there has been an influx of German and Indian buyers targeting the central London market. Turkish investors too are investing in the prime London areas mainly due to the political unrest in their home country.
Regardless of the reasons for the interest, the London market is always going to bounce back and anyone considering investing in high-end property in the city could well be advised to invest before the tide turns and the added incentives currently on offer disappear forever.