Getting the right vision of London property

/ The Edge Property |

April 12, 2015 12:00 AM SGT

SINGAPORE: Roarie Scarisbrick, a partner at high-end London-based property buying advisory firm Property Vision, got up on the hoist of a crane to get to the top of the 180m, 50-storey St George’s Tower when it was newly completed a year ago.

“I had to lie on the floor, as I was too scared to look down,” he recounts.

“But I went up there just to see which angle was going to work and which floors were going to be affected by the buildings that were coming up around it.”

That’s because a slew of new high-rise residential towers are coming up on the southern end of Vauxhall Bridge.

The projects include Market Towers, Vauxhall Square and New Broadway, which have planning approvals to build up to 50 storeys; and Chinese developer Dalian Wanda’s One Nine Elms, which will be 56 storeys.

“Buildings along the waterfront are going to be spectacular,” says Scarisbrick.

“How ever, it’s important to know where the unit you are buying is facing.

If your unit is on a low level and located at the back of the tower, the views are going to be really sad — you are going to be looking into another building or at a road.”

That explains why he takes great lengths to find out exactly where a unit is facing before buying it on behalf of his clients.

Seeing investors in Asia buying properties off-plan without having visited the actual site or knowing exactly where their unit is facing “terrifies me”, says Scarisbrick.

“I think some people are going to make some bad mistakes.”

He has been with Property Vision for more than a decade.

It is one of the most established buying agents in London, acquiring between £400 million ($801.5 million) and £500 million worth of residential property on behalf of its clients in any typical year.

The clients have traditionally been UK-based high-net-worth individuals, family trusts and funds.

However, a growing number of Scarisbrick’s clients are Singapore-based high-net-worth individuals and family offices.

Many of his clients from Singapore are interested in buying new properties, and tend to focus on smaller units because of the new stamp duty that kicked in last December.

“I’m trying to steer them slightly towards the better new developments,” he says.

“If you are buying a unit in one of the bigger developments, there’s a real danger that you [will] end up with a very nice, brand-new but slightly commoditised unit, which is identical to your neighbour’s.

And when it comes to selling, the value of your property is completely dictated by the last unit that was sold in the development.”

In Central London, the total number of residential properties above £1 million sold was about 3,900 units last year, says Scarisbrick.

On the other hand, the total number of such units in the pipeline over the next four years is estimated to be 54,000.

“A lot of these residential towers were built with overseas buyers in mind,” notes Scarisbrick.

“The sheer scale and monumentality of the towers that are rising daily are in a league of their own.”

Scarisbrick: If you’re buying a unit in one of the bigger developments, there’s a real danger that you [will] end up with a very nice, brand-new but slightly commoditised unit

Roarie Scarisbrick Property Vision partner

In the past, Scarisbrick could just walk into the office of property agency Knight Frank or Savills and there would be just two or three new developments to choose from.

Today, there are 50 to 60 new projects.

“It is mind-boggling,” he says.

The introduction of the new tiered stamp duty last December may have been a massive shock, but it was priced into market values within two to three weeks.

However, even before the new stamp duty was imposed, he had noticed that some of the savvier overseas property investors were switching their focus to London’s commercial properties.

That led the firm to set up PV Commercial last year, to offer its clients commercial offerings in addition to residential properties.

PV Commercial is headed by James Andrew.

Just as investors in Singapore had switched to commercial property two years ago when the additional buyer’s stamp duty for residential property was increased, the same thing is happening in London.

“A lot of investors in Singapore are interested in hotels,” observes Andrew.

“But there are much better returns in commercial properties, not just hotels.”

For someone buying a £5 million commercial property, the transaction cost is only 4% compared with 12% for a residential property of the same value if bought under an individual’s name.

However, if the residential property is purchased under a company, the stamp duty is 15%.

The returns on a commercial property are also more attractive.

Andrew estimates cash returns on a commercial property to be 5% to 7% compared with 1.5% to 2% for a residential property in prime Central London.

What is weighing down the residential market is the upcoming general election.

“An election year is always difficult, and this one is especially so because the stakes are high,” Scarisbrick says.

Overseas investors who sell their properties will also have to pay a capital gains tax.

In the lead-up to the elections next month, most sellers have been holding on to their residential properties in prime Central London.

“In a situation like this, where the perception is that the market is down, nobody sells.

Actually, there is still some demand, because there are still people coming from Russia, the Middle East or other parts of the world who want to buy in London,” notes Scarisbrick.

This article appeared in the City & Country of Issue 672 (Apr 13) of The Edge Singapore.

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