The return of London's City Boys and Bonus? What do you think?

[Matthias Offodile]

Mayfair rental signals return of City boy and bonus

The £40,000 a week flat Brick Street Mayfair


A Mayfair triplex apartment — with cinema, car lift, secret courtyard garden and swimming pool — is to let at £40,000 a week.

This rent, which is more than 250 times what you would pay for a studio in Clapham, is seen as an emblem of the confidence in the London housing market, where the return of the City boy, with his bonus, is emerging as the theme of the autumn and winter.

Lucy Morton, of WA Ellis, the estate agency offering the Mayfair flat, suspects that a film star will be the short-term tenant of the apartment, situated in Mayfair’s Brick Street.

Peter Wetherell, a Mayfair estate agent, explains that the rent is cheaper than the bill for a suite, or suites, in one of the deluxe hotels that line nearby Park Lane. A star, plus entourage, would have room to rest and play in the apartment, as there are seven bedrooms, seven bathrooms and two kitchens.

If this celebrity decided on a longer stay in London — more than six months, say — then Ms Morton would be willing to drop the price to £30,000 a week. This would be a record for a long-term let.

Ms Morton says that the lettings market, which was badly damaged by the collapse of Lehman Brothers, is coming out of the doldrums. She says: “Everyone has been worried that there’s going to be a W-shaped recovery, but there is no sign of that.”

However, one group usually fonder than anything of a prime Central London address does not yet seem to be cheered by the lifting of economic gloom. Not so long ago, a super-rich international businessman would have been seen as the likely customer for the Brick Street rental. But many among the loaded are said to be sulking just now: their net worth has shrunk somewhat, despite the stock market’s resurgence, and they are not romping around Central London accumulating real estate. The absence of Americans has been noted.

Ed Mead, of Douglas & Gordon, the estate agents, says: “The demand for really high-end £3,000-£4,000 per sq ft places is much diminished; it will come back, but it’s going to take a little bit longer. Some of the developments in this market segment are beautiful, but demand is at an all-time low.”

However, the return of bonuses and a slightly greater supply of finance means that younger City executives are becoming increasingly active.

This means, as Mr Mead explains, that there is little problem selling anything under £3 million. The market for a £2.1 million Chelsea penthouse on sale through Savills is the twentysomething European banker paying cash, not the fiftysomething tycoon who, in the spring, would have been acquiring a home for his children.

Cash and competitively priced mortgages are enabling the twenty-and thirtysomething City buyers to scale the housing ladder.

David Salvi, of Hurford Salvi Carr, the estate agents, who specialises in Bloomsbury, Clerkenwell and Docklands, says: “Lots of people are moving within an area, from a a two-bed flat into a three-bed penthouse or from a three-bed penthouse to a house.”

As Mr Wetherell says: “Some people are having a very good recession.”

James Bond style in stable

A skip and discarded boxes are delights you find if you view Brick Street, W1, on Google Street View (Judith Heywood writes). Yet in this unappealing dogleg is one of the most lavish properties to grace London’s rental market: a seven-bedroom pied-a-terre to let at £40,000 a week, short term.

This is no grand townhouse, but a former coachhouse and stables, built for the Marquess of Londonderry in the 1880s. Its fine terracotta-dressed façade, tucked between Piccadilly and Old Park Lane, masks modern must-haves for the international super-rich. It has underground parking, with car lift, a pool, a cinema room, a gym and eight reception rooms.

Peter Wetherell, the Mayfair agent, said: “I have always known it as the James Bond house. It has all the electrics, all the gadgets, all the gimmicks.”

The letting agent, WA Ellis, expects keen interest. Ellis’s Lucy Morton says that the 17,000 sq ft property is “the best on the lettings market in all of London”. A long-term let will be £30,000 a week, still a record for a bolthole of this type in London, she says.

Penthouse fit for a City boy

City money is returning to Chelsea (Lucy Alexander writes). An estate agent selling a £2.1 million three-bed penthouse flat on the Kings Road was confidently specific yesterday that the buyer would be “a European banker aged between 26 and early 30s, paying cash. Earlier this year it would have been an older buyer, between 40 and 60, who was buying it for his kids. They were the only ones who had any money. But now the bankers are back.” Charlie Bubear, of Savills, added that in his Knightsbridge office “we have had our biggest September on record”.

The flat is certainly special. Occupying the thirteenth and fourteenth floors of a former 1960s council tower block, which received a questionable facelift in the 1980s (think yellow plastic cladding), it has a spectacular 180-degree view of London, from the western suburbs to Canary Wharf in the east. Such a view is unique for a private home in Chelsea. The owners Warren Hall, a property finder, and his wife Kirsty, a private PA, have lavished money on the 1,539 sq ft flat since they bought it in 2006, creating an opulent but low-maintenance flat. Crucial for the single City boy.

Bayswater flats tick the boxes

No 4 Connaught Place meets a number of the requirements for the buyer of a luxe London apartment (Anne Ashworth writes). The first of these is slick modernity behind a period façade, popular with Russians and almost everybody else. The Grade II-listed house, for which Knight Frank is the agent, was built in 1812.

Until recently it was Cadbury’s corporate HQ, but it has been buffed up and converted into ten flats. Noughties minimalism reigns inside the flats, although Lifschutz Davidson Sandilands, the architects, have preserved the ornamention on the walls of the ballroom. This is the colossal sitting room of one flat.

Another plus is the location, by Marble Arch, seconds away from Connaught Square, where stands the Bayswater mansion of Tony Blair, the former prime minister. Prices range from £1.1 million to £3 million for the three-bedroom apartment on the entire first floor and half of the flats are sold.

Adam Starr, investment director at Redevco, the developers, said that buyers see “the potential for upside” on their Bayswater investment. Will this be one of Mr Blair’s long-term legacies

http://www.timesonline.co.uk/tol/mon...cle6868933.ece

PS: I wonder if they still haven´t learned their lesson?

[BUTEMBO21]

The crisis didn't have a Psycological consenquence. They recovered sooner than they anticipated.

[buhera]

Thats the way capitalism works its boom and bust.The financial sector will recover and start with the excess and then the crash and so forth.Whether its th Asian financial crisis to Long Term Capital, Russian default or Latin America debt these things move in cycles.

[Carver02]

City boy - sounds like a male hooker.

[Lydon]

European property prices are so ridiculous.

[Xusein]

How vulgar.

[bayviews]

Originally Posted by Matthias Offodile

PS: I wonder if they still haven´t learned their lesson?

Oh yes I bet they have. The lesson so far is play the high stakes, high risk casino games, go bust, ditch your poor suckered clients & customers & the government will bail you out. With no consequences.

[BUTEMBO21]

Originally Posted by bayviews

Oh yes I bet they have. The lesson so far is play the high stakes, high risk casino games, go bust, ditch your poor suckered clients & customers & the government will bail you out. With no consequences.

Yes indeed. Capitalism is Casino. and the governement will always bail you out. If the don't bail them out. it's the economy that will suffer. "No jobs, means no Taxes". No Taxes, means the Governement will have a drought.

[clive3300]

This sort of article is just populist trash.

There are half a million generally well-paid finance workers in London, but because one person has the cash to buy a big property outright it means its all going to hell? The recent crash happened because one of the scores of businesses within large banks seemed completely unable to manage their risk. In virtually all other asset classes the risk is very tightly managed and closely regulated internally, and externally by the FSA.

Virtually everyone who makes millions of pound bonuses has banked a very substantial realised profit and well deserves their reward. If they do not pay it, the Bank will lose their most valuable asset - their star traders.

[bright2]

The FSA has not done enough to regulate at all, these bonuses were not earned. The deals were a mirage, profits from worthless securities and bonds, that is why the New York State DA (Andrew Cumo) is going after all these guys. The FSA is too weak, the SEC and the New York Regulators are going to have clean up the mess. No one is relying on the FSA. The amount of share holder law suits in the New York state Courts is amazing (RBS, Bears, HSBC), and why because there was no due diligence or descent long term risk analysis.

[clive3300]

You clearly dont realise that there is more to investment banks than their structured credit divisions.

[bright2]

Trust me I do, I have worked on both sides of the atlantic.

[eyrie]

Originally Posted by Carver02

City boy - sounds like a male hooker.

and he sings in a boy band called the Sugarsnaps

[clive3300]

Originally Posted by bright2

Trust me I do, I have worked on both sides of the atlantic.

Then how can you imply that all bonuses in the entire banking world are "not earned." and that all asset classes are not properly regulated?

[popa1980]

Originally Posted by clive3300

This sort of article is just populist trash.

There are half a million generally well-paid finance workers in London, but because one person has the cash to buy a big property outright it means its all going to hell? The recent crash happened because one of the scores of businesses within large banks seemed completely unable to manage their risk. In virtually all other asset classes the risk is very tightly managed and closely regulated internally, and externally by the FSA.

Virtually everyone who makes millions of pound bonuses has banked a very substantial realised profit and well deserves their reward. If they do not pay it, the Bank will lose their most valuable asset - their star traders.

Nonsense. Like the African presidents who "deserve" their Swiss bank accounts? Well no surprise you work in the finance sector. Banks over the years have progressively reduced the proportion of liquid cash (MY money- that I slaved overworking as a doctor in the NHS to earn) that they hold- compare the situation with 30 years ago- instead, they decided to progressively increase the proportion gambled on stockmarkets and other investments. They gave high rewards for often irresponsible strategies and actively encouraged risk taking. I had friends who were in mid-20s; - with no degree in economics/business etc- who were working at investmest banks and controlling tens of millions- earning 6 figure bonuses at such a young age. A leading anonymous banker-whose job it was to assess risk taking in his leading investment bank- wrote in the FT a few months ago that when he questioned some very large, risky investments before the credit crunch- he was summoned by his CEO, and division director and hushed up- eventually his bank lost billions didue to these deals.
We, the public, want a return to the prudent banking of yesteryear and end this cowboy culture of excessive bonueses.

[bayviews]

Originally Posted by popa1980

We, the public, want a return to the prudent banking of yesteryear and end this cowboy culture of excessive bonueses.

Very well stated.

[clive3300]

Originally Posted by popa1980

Nonsense. Like the African presidents who "deserve" their Swiss bank accounts? Well no surprise you work in the finance sector. Banks over the years have progressively reduced the proportion of liquid cash (MY money- that I slaved overworking as a doctor in the NHS to earn) that they hold- compare the situation with 30 years ago- instead, they decided to progressively increase the proportion gambled on stockmarkets and other investments. They gave high rewards for often irresponsible strategies and actively encouraged risk taking. I had friends who were in mid-20s; - with no degree in economics/business etc- who were working at investmest banks and controlling tens of millions- earning 6 figure bonuses at such a young age. A leading anonymous banker-whose job it was to assess risk taking in his leading investment bank- wrote in the FT a few months ago that when he questioned some very large, risky investments before the credit crunch- he was summoned by his CEO, and division director and hushed up- eventually his bank lost billions didue to these deals.
We, the public, want a return to the prudent banking of yesteryear and end this cowboy culture of excessive bonueses.

What has African dictators have to do with this?

Funny attitude from a government employee whose politically-driven unearned vastly above market increases in wages over the past few years have largely paid for by the UK's only major globally competitive industry.

Its clear from your attitude and the opinion of most low paid workers in the UK that the main issue with City bonuses is sour grapes.

Yes elements of the City screwed up big (and many cityboys lost fortunes - they have been stung) - but the only reason the government is able to ride to the rescue with a trillion dollars is because of all the money make in the past 20 years by the City. They certainly couldnt raise this sort of cash from the car industry.

The sad thing is that the average british joe would love to see the end of the City. However take it away and Britain would have a GDP/c about that of Greece. Just think about that.

Remind me of Zimbabwe a bit too. All the average joes hate the few who are wealthy and decide to try destroy them, without realising they are the major wealth creators. Just like with the Zim farmers, the Cityboys and their businesses will simply move away to other cities. The top productive London banks are almost all foreign and will happily make a more appreciative country richer.

I do agree with you absolutely that retail banks should be stopped from pretending to be investment banks. They dont have the skills to manage the risk and they are so large that when they fail they risk the entire system.

If just investment banks played this game and died when it went wrong, no one would have cared, and the system would have not been threatened.

[clive3300]

And before any other wannabe economists climb into the argument - the UK's gigantic fiscal hole was NOT caused by the bust. It was (and this is a statement of fact, not opinion) by Labour running a huge fiscal deficit right through the boom. They seem to have forgotten about the economic cycle and that tax receipts ALWAYS drop at the end of the boom at the same time as welfare payments rise. Duh.

Government spending went up from 36% to 52% of GDP during labour due to borrowing money to force money into services without thinking about sustainability. In particular the NHS was force-fed money faster than it could absorb it, and as any first year economics student will know, that causes localised price inflation and inefficiency.

[slman]

What caused the bust?

[clive3300]

Originally Posted by slman

What caused the bust?

Well to find the right answer, one should look closer from what the ultimate cause was, as separate from the proximate cause (ie the trigger). E.g. the shooting of the Archduke was the trigger for WW1, but was not the underlying cause (which was rampant nationalistic imperialism and militarism in the powers).

There are a lot of opinions and this will be analysed for decades I am sure, but IMO the ultimate cause was low interest rates due to Asian countries (largely China) stoking of western consumption resulting in a runaway asset price bubble as rising incomes and low interest rates meant large mortgages more affordable. In the past, booms have been slowed by rising interest acting as a sort of control. This didnt happen this time.

So the asset price bubble in turn created more demand as people felt richer as their house had gone up in value and were happy to leverage equity out for more spending. I dont think there are figures out there yet, but this is something like 70% of the cause. We are talking several trillion dollars in spending from this.

Throw in the mortgage mess, ie Liars Loans etc had actually quite a bit smaller effect, simply because MOST people buying homes actually DO have jobs and incomes. I would say that the value of these loans as somewhere in the 200billion range.

However elements of the banking industry's exposure to these loans made the money markets sensibly reconsider the credit-worthiness of some of the more exposed members and they were not able to access easy credit. Part of this was the market consensus being that they could not trust the risk management and market exposure of certain companies - particularly the ones that had been playing with fairly complex derivative products that they didnt understand.

This made some of them e.g. Northern Rock in the UK go bust pretty quick. The freezing of the global credit markets has not happened in living memory in was not a scenario very many people considered.

So (again IMO) the bust was always going to happen. Just the mechanism of the trigger was in doubt. If it hadnt been a "credit crunch" it might have something else - a new energy bust or possibly China stopping buying US gov bonds. Who knows.