London has surpassed New York as the world’s greatest city. Resplendent, booming, and conveniently located for the growing cadre of Russian oligarchs and Arab petro-billionaires, the European capital has leapfrogged its long-time American rival.
Among the world’s richest people, Britain is seen as the most desirable place for the next multi-million-dollar apartment with a view. With favorable visa rules, a political and financial center, cultural excellence and a network of elite private schools to finesse their heirs, the very wealthiest are now focused on London.
The city has replaced New York as world number one in the eighth annual Wealth Report published by global property consultants Knight Frank. “London is a much more international city than New York,” Liam Bailey, the consultancy’s head of research, told The Daily Beast. “It is the capital city of Europe when it comes to finance, politics, advertising and media whereas New York shares some of those functions with other cities in America. Its dominance isn’t as clear cut.”
In purely economic and political terms, New York still has the edge but it is London that boasts the greatest number of resident Ultra High Net Worth Individuals (The UHNWI club has a minimum entry requirement of $30 million), and scores best when the views of the world’s richest are analyzed. Abishek Lodha, the managing director of India’s biggest prime property developer, recently decided to expand his investment portfolio outside of Asia. He considered New York, but ultimately decided there was only one choice. “London, because it has emerged as the global capital of money and talent,” he said. “The business and leisure opportunities are unmatched.”
David Leppan, the chairman of Wealth-X which helped to compile the data for the Wealth Report Global Cities Survey, said London was the most important hub for his UHNWI clients. “London [is] the West’s only truly international city,” he said.
Russians are clustered along the banks of the Thames in West London, while Arab investors have poured billions into central London districts like Mayfair. Asian property developers, like the Malaysian SP Setia group, have invested in huge new projects all over the city including the redevelopment of the Battersea power station into luxury condos, which they have largely sold to clients back home.
Bailey said the sales of premium property, worth more than $3 million, rose 34 percent in London last year. On average, you can buy 270 square feet of luxury London property for $1 million. Only Monaco and Hong Kong are more expensive, according to Knight Frank’s research, New York limps in at sixth place.
For Jonathan Miller, one of Manhattan’s leading luxury real-estate consultants, all this talk of London’s dominance is overblown. “In my view New York is still number one,” he said.
Like London, Miller said New York was experiencing a surge in interest from foreign investors. In 28 years of real estate appraisals, he said the property market had only seen a similar explosion in foreign interest in 2007. “In the last three years, there’s been a tremendous amount of European, Chinese and South American investors—Venezuelans and Brazilians,” he said. “We are seeing investors from the Middle East and Russia but nothing like London. Not even close. I think it’s a pragmatic decision, a practical decision because of travel.”
Bullish Miller insisted London should still be in second place but he said the new occupant of City Hall could be a cause for concern. “I’m not saying De Blasio is the reason London has overtaken New York,” he said. “But there’s a new mayor and a new party after 12 years of the most pro-development mayor in New York history. Investors are not excited about uncertainty.”
Indeed, it’s the security of investing in property in both New York and London that has helped to transform both into international hubs. Many UHNWIs see the luxury property market in these cities as a kind of global reserve currency that offers safety from fluctuating markets and unstable governments at home.
As Vladimir Putin sends troops into Crimea, attracting international condemnation and a tanking Russian stock market, the Wealth Report suggests that 37 percent of UHNWIs in Russia are considering a move abroad. London is their most likely destination for a number of reasons. In the 1990s, the British government introduced an investment visa, which substantially improved work permit chances if a foreign national invested $1.5 million in the country; none of the oligarchs who subsequently moved to London has been extradited back to Russia; and off-shore incomes are rarely scrutinized by the British taxman.
Dr. Pippa Malmgren, a former White House economic advisor, explained in the report that tax advantages had benefitted the wealthy moving to London. “I would argue that the UK has now emerged as the world’s most attractive residence for nondomiciles,” she said. “The crackdown on tax havens in Switzerland has removed these old options for new capital. As a result, there has been a huge influx of global capital into the UK.”
Citizens from fellow members of the European Union also have virtually unlimited ability to live and work in Britain. The result has been a recent influx of foreigners into London, making it a thriving multi-national conglomeration of the global super-rich, and European adventurers.
Stephen Bayley, cultural critic and Londoner, said the fresh, foreign impetus had left London unrivaled. “Baalbek, Palmyra, Pompeii, Rome, Liverpool. New York can now be added to that melancholy list of lustrous metropolises gone dull,” he said. “My son often goes to what he calls New York, but he means Brooklyn. Williamsburg means to him what SoHo once meant to me. He never goes to Manhattan because Manhattan means old money, old values. It seems to have lost the sense of urgency and organic vitality that made it great. Meanwhile, the strange thing about London, as the capital of a conservative nation, is that it’s a city positively addicted to change.
“It’s an old truism that you don’t finish a city, you start it. New York, a magnificent catastrophe, was finished some time ago”.