Students trump bankers for luxury London homes
LONDON (Reuters) - Floor to ceiling windows, chairs by French designer Philippe Starck, four-poster beds and a short walk from the Louis Vuitton store on London's Bond Street. These are no ordinary student digs.
Apartments for rent in London's most exclusive neighbourhoods have traditionally been the preserve of bankers. As the potency of the financial sector wanes, they are increasingly let to children of the international super-rich studying at the city's universities.
"I chose the place and then asked my parents whether it was alright," said Sumiro, a 21-year old Indonesian student who will be living alone in the 895 pound-a-week two-bedroom apartment with the Philippe Starck chairs when he starts university in September.
Another attraction were his numerous friends living nearby, he said.
Unlike the stereotypical British students who squeeze into cramped flats and shop in budget stores, the offspring of the super-rich exhibit a taste for luxury furnishings, in-house gyms and cleaners that visit twice a week.
"They're looking for a hotel room," said Naomi Heaton, chief executive of residential fund manager London Central Portfolio, which has students from Russia, China and Saudi Arabia renting homes in an overall property portfolio worth 500 million pounds.
"Many of them would have experienced a fairly sophisticated lifestyle, travelling around the world business class. Their requirements are similar to that of corporate tenants."
Nadine, the daughter of a Lebanese businessman, laid out her accommodation requirements.
"We didn't want a typical British student pad, we wanted something quite big, quite decent, so that there would be space for our parents and friends when they visited," said Nadine, who lived in a 2,400 pounds-a-month London flat while studying last year.
The rise of the wealthy foreign student comes as companies in the financial sector cut jobs and budgets, under pressure from shareholders and politicians.
At the same time, strong economic growth in China and other parts of Asia has created immense wealth, mainly fuelled by manufacturing, construction and commodities. The number of U.S. dollar millionaires in Asia outnumbered North America for the first time in 2011.
It has led to a surge in demand from overseas buyers of the best London homes, seen by many as a sound investment.
Prices for the most sought after central London properties have risen about 44 percent in the last three years, more than twice the increase across the capital as a whole, Knight Frank data shows.
"The wealth underpinning the student market is stronger than the wealth underpinning the corporate tenant market," Heaton said.
Paris and New York are also popular student destinations. In February, Russian fertilizer oligarch Dmitry Rybolovlev paid $88 million (57 million pounds) for New York's most expensive apartment, a penthouse the size of two and a half tennis courts with views of Central Park, for his student daughter Ekaterina Rybolovleva.
The previous owner was a banker - former Citigroup (C.N) CEO Sandy Weill.
Parents keen to get the best located homes for their children are often prepared to outbid bankers, Heaton said. They also sometimes pay a year's rent upfront as their children don't have a UK credit history.
LCP research showed the proportion of homes in prime neighbourhoods like Mayfair and Knightsbridge rented by international students doubled to 23 percent in the six years to June 2012, becoming the second largest group behind the financial sector at 45 percent.
"With the current rates of growth, international students would represent 50 percent by 2020," LCP's Head of Investment Management, Hugh Best, told Reuters, saying expansion in the financial sector was likely to plateau.
Job cuts among bankers caused prime London rents to fall for the first time in two years, property consultant Savills (SVS.L) said on June 22.
Foreign students in the City of Westminster district, which includes some of the city's priciest streets, pay an average annual rent of 28,878 pounds, LCP said. By contrast, the average UK student paid 3,490 pounds in 2011, data on UK website Accommodation for Students said.
About 26 percent of London's students are from overseas, with China, India and Nigeria sending the most students to the UK between 2009 and 2011, data from the UK Council for International Student Affairs showed.
Bankers squeezed by cut budgets were eyeing moves to cheaper housing in less central London neighbourhoods such as Fulham or Bayswater, said Matthew Hobbs, who heads up the lettings team at Savills's Kensington office.
"Instead of spending 1,000 pounds a week, they're spending 800 pounds a week. They're scaling back. You can rent a nice house in Islington for 80 percent of what you can rent a nice house in Kensington for."
Renting often paves the way to buying, Heaton said, as students will persuade their parents to buy a London property once they are familiar with the city, another factor helping to super-charge the central London property market.
"It's a function of globalization," she said. "One generation makes the money and the next generation gets sent to university."
(Reporting by Brenda Goh; Editing by Tom Bill and Janet McBride)
- Tweet this
- Share this
- Digg this