The Ultra-Wealthy Are Splashing Down Millions to Snag London Offices. Here’s Why.
Forget supercars and luxury yachts. The latest flex among the ultra-wealthy is . . . office space in the United Kingdom’s capital.
The global one-percenters are spending millions on London offices, partly because they want to show them off to friends while strolling the tony streets of Mayfair and the West End, as reported by The Times U.K.
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Over the past year, ultra-high-net-worth individuals and affluent family estates have bought offices in the city worth about $1.6 billion (£1.3 billion), according to data from estate agency Knight Frank. Nearly half of the money spent has come from investors in Europe, with the rest hailing from buyers in Britain and Asia.
The offices have been snapped up by retail billionaires, shipping magnates, boxing superstars, and the like. Many are using the office blocks as a way to safeguard their wealth but also to flex to other members of the seven-figure club, according to Knight Frank’s head of London capital markets Nick Braybrook.
“You get people buying offices—which are let to BP or someone for 20 years—who could probably get a more secure return from buying BP bonds,” Braybrook told the Times, “but telling their billionaire mates that they’ve bought a load of BP bonds probably doesn’t look quite the same as saying that they own the company’s headquarters on St James’s.”
Amancio Ortega is a perfect example. The 87-year-old owner of Zara paid roughly $103 million (£82 million) for an office block in ritzy Fitzrovia that used to be rented by the BBC. In addition, former heavyweight boxing champion Anthony Joshua shelled out about $31.4 million (£25 million) on a building in the West End, while the family of Manolo Blahnik spent about $44 million (£35 million) on an office in Mayfair. Monaco-based billionaire Eyal Ofer has also bought spaces in Soho and the West End.
Wealthy individuals don’t seem to be as hellbent on financial returns as institutional investors, either. “There’ll be some that just fall in love with a building because it’s near to the London School of Economics, where their children are studying,” said Braybrook. Even still, rich individuals have capitalized on the declining value of London offices, which have dropped by about a fifth so far this year. Moreover, they are planning to transform these “secondary buildings” into prime office spaces to make a profit.
“They are definitely getting a bit more excited by the prospect of buying something, doing it up, and then selling it on to make a decent return,” Baybrook adds.
Sounds like it’s time to start looking at real estate across the pond.
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