Forget Russians! A Small London Flat Will Cost $50 Million By 2050

Tyler Durden's picture




 

While Canada may have bitten the hand that feeds it real-estate bubble, one of London's biggest real-estate investors says that even if sanctions were imposed against the Russian oligarchs, London property prices will continue to soar. The average London "flat" could fetch GBP36 million by the middle of the century, and is therefore a bargain now, Hugh Best advises clients. His reasoning is impecable, "the average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change." With two-thirds of new homes in London sold to investors, they are all driving up prices and "the Russians are only a part of it... and the Ukrainians might come with their money."

 

Via The Guardian,

You may think a shoebox-sized flat in central London costing more than £1m is an insane illustration of a property price bubble, but it could be the bargain of the century.

 

According to projections by one of the biggest investors in "prime" property in the capital, that average flat could fetch £36m by the middle of the century – if its predictions of 9%-a-year growth in prices become reality.

 

Casting aside concerns that Russian oligarchs will no longer be sheltering their billions in luxury mansions, London Central Portfolio has launched a £100m fund to buy one- and two-bed apartments in the capital's most exclusive districts.

 

...

 

Hugh Best, LCP's investment director, said: "The average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change."

 

...

 

The Crimea crisis would not halt London property's inexorable rise, said Naomi Heaton, LCP's chief executive. "The Russians are only a part of the market and have been dwindling in number over the past few years … we could instead have the Ukrainians coming in with their money. London is the destination for the high net worth community of the world, and we are only just beginning to see the mainland Chinese. The loss of some Russian oligarchs is not a fundamental loss for the market."

So buy, buy, buy...

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Thu, 03/06/2014 - 19:15 | 4519124 ebworthen
ebworthen's picture

Yeah, sure, to the moon, nothing will ever affect property valuations (*cough*).

Thu, 03/06/2014 - 19:18 | 4519135 Looney
Looney's picture

This is beyond FUNNY!

USS Truxtun’s foremast is 198 feet, mainmast – 220 feet, but the Bosphorus Bridge’s clearance is (get this!) 210 feet!

I hope the main mast is somehow retractable or somepin’, otherwise we will look really dumb.  ;-)

Looney

 

Thu, 03/06/2014 - 19:29 | 4519171 zaphod
zaphod's picture

The title of the article shouldn't be that a flat will be "worth" $50M in 2050, because that isn't a representation of its value.

The title instead should be that your money will not be worth anything by 2050 and your live savings will not be able buy a simple flat.

Thu, 03/06/2014 - 19:31 | 4519179 General Decline
General Decline's picture

Zimbabwe anyone?

Thu, 03/06/2014 - 20:01 | 4519275 Scarlett
Scarlett's picture

Wasn't london burning the other day?  There may be no london by 2050.

Thu, 03/06/2014 - 21:09 | 4519558 pavman
pavman's picture

[t]wat ever happened to gentrification?!

Thu, 03/06/2014 - 21:27 | 4519633 Dollarmedes
Dollarmedes's picture

Go long on London hit-squad futures.

Thu, 03/06/2014 - 22:00 | 4519732 Normalcy Bias
Normalcy Bias's picture

Rose glass optimists. This 'intelligent' chimp will have long exterminated itself by then...

Fri, 03/07/2014 - 02:00 | 4520225 Handful of Dust
Handful of Dust's picture

"House prices never go down,"....the mini-skirted, 5th grade teacher-turned Realtor down the block says.

Thu, 03/06/2014 - 20:05 | 4519299 Anusocracy
Anusocracy's picture

All those million dollar flats in 1980s Tokyo are now worth billions.

Right?

Thu, 03/06/2014 - 20:39 | 4519436 DeadFred
DeadFred's picture

By 2050 $50,000,000 will buy about 100 pounds of pinto beans so the flat will be a steal. Unless of course the place is infested with zombies.

Thu, 03/06/2014 - 19:39 | 4519205 Graph
Graph's picture

Or....there will be no flat. Just a rubble.

Thu, 03/06/2014 - 19:59 | 4519272 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

The title instead should be that your money will not be worth anything by 2050 and your live savings will not be able buy a simple flat.

True, but bread will only be eight hundred dollars a loaf, so might as well buy two.

Thu, 03/06/2014 - 19:39 | 4519173 DoChenRollingBearing
DoChenRollingBearing's picture

And when things get even more dicey in the Middle East, that much more will flow to London.

Just like Lat Am money to Miami.

Just like Chinese money to LA, San Fran and Vancouver.

Just like Russian and other Euro money to NYC as well.

Thu, 03/06/2014 - 19:42 | 4519216 NihilistZero
NihilistZero's picture

BY NOW OR BE PRICED OUT FOREVER!!!!!!

I cannot fucking believe they're pulling this shit again just 6 years after the bust...  Luckily the average Joe's memory isn't THAT short.  Anecdotally hearing a lot of people saying "Here comes another crash."  Glad people are starting to wake up to the Banksters games.

Wall Street/London "You will never find a more wretched hive of scum and villainy..."

Thu, 03/06/2014 - 19:44 | 4519223 jmcadg
jmcadg's picture

Also, luckily the Average Joe is fuckin' broke.

There are only so many banksters able to afford this shit - and they are getting thin on the ground (or is that flat!)

Thu, 03/06/2014 - 19:52 | 4519245 Mentaliusanything
Mentaliusanything's picture

Oh that was " Fun from high"

Why = X 2...... so fubar Hugh

Thu, 03/06/2014 - 19:54 | 4519249 NihilistZero
NihilistZero's picture

There are only so many banksters able to afford this shit...

And there in lies the rub.  The FED knows the only way tokeep the economy from seizing up is to put $$$ back in the hands of consumers, they just won't say it.  However look at their actions.  The taper goes on (with whatever excuse or magic metric is needed to justify it).  The have all but gauranteed a rate rise in 2015.  Until you get housing back down to a manigable percentage of income the proles can't spend.  That's why Staples, Radio Shack, etc. are all fucked.  The FED used the last 5 years to save their member banks from nationalization.  Mission accomplished.  Now they are going to let others (taxpayers and specuvestors) take the 5-Year-Delayed losses from Housing Bubble 1.0.  Can't wait to see those stupid enough to invest in Rental Backed Securities and REITs take their losses as the FED shrugs it's shoulders.  As long as BofA, Chase, Citi and Wells are okay and the dollar is still reserve they could give fuck all.  As long as those 5 interests are served the FED has fullfilled it's REAL charter.

Thu, 03/06/2014 - 21:13 | 4519568 pavman
pavman's picture

I'd say 90% of this board have been waiting for part duex for like 6 years ... its coming... 1929 bitchez.  Die bart die.  The bart the.  Ok time to pet the donkey...

Actually, REITs are doing quite well right now.  I sold all mine when I saw they had shit returns last yar.  Gee *now* they're up like 9%.  At least in my 401k.  Nucker Futzin.

Fri, 03/07/2014 - 14:19 | 4521962 Blankenstein
Blankenstein's picture

 

Things weren't looking so good in the Summer of 2012, then Ben helicopters in and starts an unprecedented printing spree (before the elections) of $40 billion per month upping it to $85 billion in December.  Why such a drastic intervention if things are so hunky-dory?

 

Thu, 03/06/2014 - 20:55 | 4519500 Kirk2NCC1701
Kirk2NCC1701's picture

They'll "cross" that bridge when they get to it.

Thu, 03/06/2014 - 21:01 | 4519530 walküre
walküre's picture

or wait till a really low tide...

Thu, 03/06/2014 - 19:16 | 4519127 monad
monad's picture

Gold bitchez!

Thu, 03/06/2014 - 19:36 | 4519147 TheGermanGuy
TheGermanGuy's picture

And people born 15 years ago will be 5 meters tall because they have grown an average of 10 centimeters a year and I see no reason for that to change... I mean there will still be food around and stuff, so why should it change?

Thu, 03/06/2014 - 19:23 | 4519151 pragmatic hobo
pragmatic hobo's picture

sounds one of those sound-bites you usually hear at the top ...

Thu, 03/06/2014 - 19:38 | 4519206 KickIce
KickIce's picture

Just what I was thinking, we heard the same thing in the US in 2007-08.

Thu, 03/06/2014 - 20:03 | 4519285 TheFourthStooge-ing
TheFourthStooge-ing's picture

Sounds like Hugh Best has been out dancing with Chuck Prince.

Thu, 03/06/2014 - 19:25 | 4519154 Frank N. Beans
Frank N. Beans's picture

"...is therefore a bargain now, Hugh Best advises muppets..."

fixed it

 

Thu, 03/06/2014 - 19:26 | 4519159 hack3434
hack3434's picture

Off topic: Here's Satoshi! https://www.youtube.com/watch?v=JvObl5TWhTE

 

 

Thu, 03/06/2014 - 19:26 | 4519162 monopoly
monopoly's picture

And it is stories like this that show us the beginning of the end. And so it goes.

Thu, 03/06/2014 - 19:28 | 4519169 Eahudimac
Eahudimac's picture

Yes, get them all in one place!

Thu, 03/06/2014 - 19:32 | 4519181 Doubleguns
Doubleguns's picture

Once they are all in one place.....

 

http://static1.grsites.com/archive/sounds/misc/misc303.mp3

Thu, 03/06/2014 - 19:28 | 4519170 1stepcloser
1stepcloser's picture

What they failed to mention is it can also be had for 4 oz of gold

Thu, 03/06/2014 - 19:30 | 4519174 Ignatius
Ignatius's picture

One doesn't move to the City of London for the weather.

Thu, 03/06/2014 - 19:32 | 4519186 obj089
obj089's picture

not that much. ~6-7% above inflation. i would bet it is around 30 - 60 

Thu, 03/06/2014 - 19:32 | 4519187 huggy_in_london
huggy_in_london's picture

Says LCP boss who is trying to raise £100m to buy property... what a surprise.  I never cease to be amazed how stupid some people are or how stupid they think others are.  

London will be a ghost town if a 2 bed flat were to cost £36m.... 

 

 

Thu, 03/06/2014 - 19:35 | 4519189 infinity8
infinity8's picture

Bollocks!

Thu, 03/06/2014 - 19:49 | 4519236 infinity8
infinity8's picture

LOL. Here's the companionn article: http://money.msn.com/top-stocks/post--why-the-dow-could-hit-26000-by-2016

Instead it is far more likely that the Dow hits 26,000 by the end of 2016. It will happen more easily than you might think.

 

"All it takes is greater-than-expecte?d economic growth. The experts have us growing at a 3 percent clip in 2014. What happens if growth comes in closer to 4 percent this year?

 

I'll tell you what happens -- the Dow jumps 20 percent and closes the year within a hair of 20,000. We’ll get stuck on that psychological barrier, but it won’t take long to bust through.

 

In 2015, that 4 percent growth inches higher to 5 percent. That will be enough to push the Dow up another 15percent to close at 22,600 by the end of 2015. Then, if growth continues at a 5percent clip, a bull market rally will send stocks up another 15percent to 26,000.

 

There you go, and I wouldn't bet against us."

Thu, 03/06/2014 - 19:35 | 4519190 Newfie
Newfie's picture

I wonder how much a cardboard box in a London alley will be worth in 2050?

Thu, 03/06/2014 - 19:41 | 4519214 Rock Sniffer
Rock Sniffer's picture

No idea, but it will still be 10x most couples' joint income.

I'm long tents; there's going to be a real shortage when this thing implodes.

Thu, 03/06/2014 - 23:59 | 4520056 Poor Grogman
Poor Grogman's picture

Share your street with some newcomers!

http://swags.org.au

Fri, 03/07/2014 - 00:24 | 4520109 Graph
Graph's picture

Five o'clock afternoon tea in carboard box. Not unpleasant at all, rather lovely.

Thu, 03/06/2014 - 19:36 | 4519194 IMACOINNUT
IMACOINNUT's picture

London will most likely look like a penal colony in 2050, and private security guards making GBP5 mm/yr doing their best to prevent more heads rolling.

Thu, 03/06/2014 - 19:37 | 4519197 Fix It Again Timmy
Fix It Again Timmy's picture

Ok, but does it have a good view?...

Thu, 03/06/2014 - 19:39 | 4519207 bdub2
bdub2's picture

btfd

Thu, 03/06/2014 - 19:41 | 4519210 Anonymouse
Anonymouse's picture

That is some brilliant financial analysis Mr. Best.  But there's no reason that 9.2% gain can't continue compounding forever.  Why sell yourself short?

What's even more exciting is that by 2100, they will be worth 2.9B pounds!  And that modest flat your great-great-great grandchildren inherit in 2200 will be worth 19.3 trillion pounds!

What a bargain!

I certainly hope LCP is getting 2 and 20 for that sort of incredible financial skill/

Thu, 03/06/2014 - 19:42 | 4519218 jmcadg
jmcadg's picture

Someone cull this guy, he's an embarrestment to human nature.

Thu, 03/06/2014 - 19:46 | 4519227 Rock Sniffer
Rock Sniffer's picture

Love to.  If some friendly country on the other side of the Atlantic will start shipping AR15s and copious quantities of ammo, I'll get it started.

Thu, 03/06/2014 - 19:43 | 4519220 markar
markar's picture

And in 2050 UK a loaf of bread will be $100K GBP assuming the currency is still around

Thu, 03/06/2014 - 20:31 | 4519405 Escapedgoat
Escapedgoat's picture

4BED Res. not far from Centre of London

1963 £3,000.00

2014 around the million mark

I do not know what the salaries or wages were at the time but that is a fact I LIVE in it

 Do I count it as equity ? no fucking way  I need to sleep someplace

For any body intersted out there  I will sell the bricks according to the Value of the house

Cheers.

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