A mansion overlooking Regent’s Park is selling for less than £130m, at a discount of more than £50m on asking price, in a sign that rising development costs and the departure of wealthy Russian buyers are hitting the top of the London housing market.
Indian businessman Ajay Kalsi has struck a deal to buy 1-18 York Terrace East, a row of 95,000-square-foot Grade-A listed homes, according to four people familiar with the deal.
The discount sale ends a difficult chapter for the former owners of the John Nash-designed property, while providing rare insight into the challenges of operating at the secretive upper end of the capital’s housing market.
Developer Zenprop bought the property in 2016, and company CEO Derek Pierre He told the Financial Times, In 2020, his goal was to obtain planning permission, renovate the 1820 building, extend the lease with freelancer The Crown Estate and sell it.
But the developer’s plan to flip the property for a profit has been soured as the housing market has shifted. Average prices for “premium” homes in London are 17.6 per cent lower than their peak in 2014, according to real estate agent Savills.
“It was a long process, a horrible experience. [There was] Brexit, a pandemic and then war. “Now the market is really tough because of the high construction costs,” said one of the people involved in the sale.
Wealthy foreign buyers are a mainstay of London’s main market, but their numbers have dwindled during the Covid pandemic and have yet to recover. Russian buyers, once popular in central London, have been on the decline in recent years and have almost faded since Vladimir Putin’s invasion of Ukraine earlier this year.
“There are no Russians, of course, very few Chinese buyers and very few Arabs,” said Andrew Langton, president of Aylesford International, the company that markets York Terrace East along with Savills.
The local wealthy have fill in the blank In the high-end real estate market, they park their cash on homes worth more than £5m at a record rate, according to Savills. However, homebuyers looking for a haven from rising inflation are not targeting complex renovation projects like York Terrace East.
because of high construction costsDue to inflation and rising interest rates, the retooling of York Terrace East is likely to be priced at more than £100m, according to people familiar with the property.
Calci did not respond to a request for comment or clarify his plans for the building, which has been authorized to be converted into 26 apartments and two homes.
A discount is an indication that the rising cost of building materials is weighing on the higher end of the market.
“Not yet bought” [the property] From what bumps into the concrete wall for construction costs, they go up day by day for bricks, cement, lumber, everything. construction costs [could be] Over £1,000 per square foot,” said one of the people involved in the deal.
What used to be £185m is now £130m. Is this an issue of construction cost inflation and uncertainty about end users, with Russians out of the market? ‘ said the person.
But York Terrace East has its own unique complexities. In February 2020, billionaire property investors the Robin Brothers loaned the property between £90m and £100m, with interest payments of up to £700,000 a month, according to four people familiar with the arrangement.
Kalsi took the loan as part of the sale, but is likely to refinance the property, according to two people.
Al Robbins declined to comment.
Pierre declined to comment. When the Zenprop chief tried to sell for £185m in 2020, he said the goal was to “get my money back and move on”.
Several people familiar with the sale say the company booked a significant loss on the property, though it’s not clear how much Zenprop has spent on it yet.
“It was a nightmare. Going out of the house would be a great relief,” someone said.